This document discusses different organizational structures including functional, divisional, matrix, process-based, and network structures. It outlines the advantages and disadvantages of each structure and when each may be most appropriate depending on factors like the environment, goals, size and technology of the organization. The document also covers topics like downsizing and reengineering processes, providing steps and considerations for structuring organizational change efforts.

1. Organization Development and Change
Thomas G. Cummings
Christopher G. Worley
Restructuring Organizations

2. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
14-2
Learning Objectives
for Chapter Fourteen
• To understand the basic principles of
technostructural design
• To understand the three basic structural
choices and two advanced structural choices
available to organizations
• To understand the process of downsizing
and reengineering

3. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
14-3
Contingencies Influencing
Structural Design
Environment
Organization
Size
Technology
Organization
Goals
Worldwide
OperationsStructural
Design

4. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
14-4
Functional Organization
V P R e s e a r c h V P O p e r a t i o n s V P H u m a n
R e s o u r c e s
V P M a r k e t i n g V P F i n a n c e
P r e s i d e n t

5. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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The Functional Form
• Promotes skill specialization
• Reduces duplication of scarce
resources and uses resources
full time
• Enhances career development
for specialists within large
departments
• Facilitates communication and
performance because superiors
share expertise with their
subordinates
• Exposes specialists to others
within same specialty
• Emphasizes routine tasks;
encourages short time horizons
• Fosters parochial perspectives
by managers and limits
capacity for top-management
positions
• Multiplies interdepartmental
dependencies; increases
coordination and scheduling
difficulties
• Obscures accountability for
overall results
Advantages Disadvantages

6. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
14-6
The Divisional Organization
C h i e f F i n a n c i a l
O f f i c e r
V P R e s e a r c h
D i v i s i o n M a n a g e r
A s i a
V P H u m a n
R e s o u r c e s
V P O p e r a t i o n s V P S a l e s a n d
M a r k e t i n g
D i v i s i o n M a n a g e r
N o r t h A m e r i c a
D i v i s i o n M a n a g e r
E u r o p e
C h i e f E x e c u t i v e
O f f i c e r

7. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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The Divisional Form
• Recognizes interdepartmental
interdependencies
• Fosters an orientation toward
overall outcomes and clients
• Allows diversification and
expansion of skills/training
• Ensures accountability by
departmental managers and
promotes delegation
• Heightens departmental
cohesion and involvement in
work
Advantages
• May use skills and resource
inefficiently
• Limits career advancement by
specialists
• Impedes specialists’ exposure
to others within same
specialties
• Puts multiple-role demands
upon people and creates stress
• May promote departmental
objectives as opposed to
overall organizational goals
Disadvantages

8. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
14-8
V P F i n a n c e V P H u m a n R e s o u r c e s
P r o g r a m M a n a g e r
A i r c r a f t
P r o g r a m M a n a g e r
N a v i g a t i o n S y s t e m s
P r o g r a m M a n a g e r
S p a c e S y s t e m s
S e n i o r V P
P r o g r a m s
V P R e s e a r c h V P E n g i n e e r i n g V P M a n u f a c t u r i n g V P M a r k e t i n g
S e n i o r V P
O p e r a t i o n s
P r e s i d e n t
C E O
The Matrix Organization

9. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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The Matrix Structure
• Makes specialized, functional
knowledge available to all
projects
• Use people flexibly
• Maintains consistency by
forcing communication
between managers
• Recognizes and provides
mechanisms for dealing with
legitimate, multiple sources of
power
• Can adapt to environmental
changes
Advantages
• Can be difficult to implement
• Increases role ambiguity,
stress, and anxiety
• Performance is lowered
without power balancing
between projects and
functions
• Makes inconsistent demands
and can promote conflict and
short-term crisis orientation
• May reward political skills
over technical skills
Disadvantages

10. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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Characteristics of
Process-Based Structures
• Processes drive structure
• Work adds value
• Teams are fundamental
• Customers define performance
• Teams are rewarded for performance
• Teams are tightly linked to suppliers and
customers
• Team members are well informed and trained

11. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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The Process-Based Structure
D e v e l o p i n g N e w P r o d u c t s P r o c e s s
P r o c e s s O w n e r
C r o s s F u n c t io n a l T e a m M e m b e r s
A c q u i r i n g a n d F i l l i n g C u s t o m e r O r d e r s P r o c e s s
P r o c e s s O w n e r
C r o s s F u n c t io n a l T e a m M e m b e r s
S u p p o r t i n g C u s t o m e r U s a g e P r o c e s s
P r o c e s s O w n e r
C r o s s F u n c t io n a l T e a m M e m b e r s
S e n i o r M a n a g e m e n t T e a m
C h a ir a n d K e y S u p p o r t P r o c e s s O w n e r s

12. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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The Process-Based Form
• Focuses resources on
customer satisfaction
• Improves speed and efficiency
• Adapts to environmental
change rapidly
• Reduces boundaries between
departments
• Increases ability to see total
work flow
• Enhances employee
involvement
• Lowers costs dues to overhead
• Can threaten middle managers
and staff specialists
• Requires changes in
command-and-control
mindsets
• Duplicates scarce resources
• Requires new skills and
knowledge to manage lateral
relationships and teams
• May take longer to make
decisions in teams
• Can be ineffective if wrong
processes are identified
Advantages Disadvantages

13. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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The Network Organization
Designer
Organizations
Supplier
Organizations
Broker
Organization
Producer
Organizations
Distributor
Organizations

14. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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Types of Networks
• Internal Market Network
• Vertical Market Network
• Intermarket Network
• Opportunity Network

15. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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The Network-Based Form
• Enables highly flexible and
adaptive responses
• Creates a “best of the best”
firm to focus resources on
customer and market needs
• Each organization can
leverage a distinctive
competency
• Permits rapid global
response
• Can produce “synergistic”
results
• Difficulty managing lateral
relationships across
autonomous organizations
• Difficulty motivating
members to relinquish
autonomy to join network
• Sustaining membership and
benefits can be problematic
• May give partners access to
proprietary knowledge and
technology
Advantages Disadvantages

16. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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The Downsizing Process
• Clarify the organization’s strategy
• Assess downsizing options and make
relevant choices
• Implement the changes
• Address the needs of survivors and those
who leave
• Follow through with growth plans

17. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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Downsizing Tactics
Tactic Characteristics Examples
Workforce
Reduction
• Reduces headcount
• Short-term focus
• Fosters transition
• Attrition
• Retirement/buyout
• Layoffs
Organization
Redesign
• Changes
organization
• Medium-term focus
• Fosters transition &
transformation
• Eliminate functions,
layers, products
• Merge units
• Redesign tasks
Systemic
• Changes culture
• Long-term focus
• Fosters
transformation
• Change
responsibilities
• Foster continuous
improvement
• Downsizing is normal

18. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
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The Reengineering Process
• Prepare the organization
• Specify the organization’s strategy and
objectives
• Fundamentally rethink the way work gets done
– Identify and analyze core business processes
– Define performance objectives
– Design new processes
• Restructure the organization around the new
business processes.

19. Cummings & Worley, 8e
(c)2005 Thomson/South-Western
14-19
Characteristics of
Reengineered Organizations
• Work units change from functional departments to process
teams
• Jobs change from simple tasks to multidimensional work
• People’s roles change from controlled to empowered
• The focus of performance measures and compensation
shifts from activities to results.
• Organization structures change from hierarchical to flat
• Managers change from supervisors to coaches; executives
change from scorekeepers to leaders