Richard L. Daft addresses themes and issues directly relevant to both the everyday demands and significant challenges facing businesses today. Comprehensive coverage helps develop managers able to look beyond traditional techniques and ideas to tap into a full breadth of management skills. With the best in proven management and new competencies that harness creativity, D.A.F.T. is Management!

1. Designing Adaptive Organizations
Chapter10

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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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Designing Adaptive
Organizations
 Organizing Principles and Concepts
 Organizing the Vertical Structure
 Using Mechanisms for Horizontal
Coordination
 Tailoring Various Elements of Structural
Design to Organizational Situations
Topics
Chapter 10

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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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The Organization Chart
“The Home Depot is the world's largest home
improvement retailer currently operating
1,363 stores.
Visual representation
Set of formal tasks
Formal reporting relationships
Framework for vertical control

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Work Specialization
 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
Division of labor concept

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Chain of Command
 Unbroken line of authority that links all
persons in an organization
 Shows who reports to whom
 Associated with two underlying principles
 Unity of Command
 Scalar Principle

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Authority
 Formal and legitimate right of a manager to
make decisions and issue orders
 Allocate resources to achieve organizationally
desired outcomes
 Authority is distinguished by three characteristics
 Authority is vested in organizational positions, not
people
 Authority is accepted by subordinates
 Authority flows down the vertical hierarchy

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Responsibility
 The duty to perform the task or activity
an employee has been assigned
 Managers are assigned authority
commensurate with responsibility
Flip side of the authority coin

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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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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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Techniques for Delegation
Give
thorough
instructions
Maintain
feedback
Evaluate and reward
performance
Delegate the
whole task
Select the right
person
Delegation
Ensure that
authority equals
responsibility

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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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Span of Management/
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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Factors Associated With Less
Supervisor Involvement
 Work is stable and routine
 Subordinates perform similar work tasks
 Subordinates are concentrated in a single location
 Subordinates are highly trained
 Rules and procedure defining task activities are available
 Support systems and personnel are available for the
manager
 Little time is required in nonsupervisory activities
 Managers’ preferences and styles favor a large span

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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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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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Departmentalization
The basis on which individuals are grouped into departments
 Vertical functional approach. People are grouped
together in departments by common skills.
 Divisional approach. Grouped together based on a
common product, program, or geographical region.
 Horizontal matrix approach. Functional and divisional
chains of command. Some employees report to two
bosses
 Team-based approach. Created to accomplish
specific tasks

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Departmentalization
The basis on which individuals are grouped into departments
 Network approach. Small, central hub
electronically connected to their other
organizations that perform vital functions.
Departments are independent, and can be
located anywhere.
 Virtual approach. Brings people together
temporarily to exploit specific opportunities
then disbands

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Five Approaches to Structural Design

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Five Approaches to Structural Design
Slide 2

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Vertical Functional Approach
 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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Divisional Structure Advantages
 Efficient use of resources
 Skill specialization development
 Top management control
 Excellent coordination
 Quality technical problem solving

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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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Horizontal 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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Dual Authority Structure in a
Matrix Organization

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Horizontal 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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Team Advantages
 Same advantages as functional
structure
 Reduced barriers among
departments
 Quicker response time
 Better morale
 Reduced administrative overhead

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Team Disadvantages
 Dual loyalties and conflict
 Time and resources spent on
meetings
 Unplanned decentralization

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Network Approach Advantages
 Global competitiveness
 Work force flexibility
 Reduced administrative overhead

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Network Approach
Disadvantages
 No hands-on control
 Loss of part of the organization severely
impacts remainder of organization
 Employee loyalty weakened

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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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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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Factors Shaping Structure
 Structure
 Follows Strategy
 Reflects the Environment
 Fits the Technology
Service Technology
Digital Technology
Experiential Exercixe: Organic versus
Mechanistic Organization Structure