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Designing Adaptive Organizations CHAPTER 10. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 2 Learning Objectives.

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Presentation on theme: "Designing Adaptive Organizations CHAPTER 10. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 2 Learning Objectives."— Presentation transcript:

1 Designing Adaptive Organizations CHAPTER 10

2 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 2 Learning Objectives 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.

3 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 3 Learning Objectives (contd.) 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. Illustrate how organization structure can be designed to fit environmental uncertainty. Define production technology (manufacturing, service, and digital) and explain how it influences organizational structure.

4 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 4 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

5 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 5 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 departments

6 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 6 The Organization Chart Visual representation Set of formal tasks Formal reporting relationships Framework for vertical control

7 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 7 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 Degree to which

8 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 8 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 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

9 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 9 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 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

10 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 10 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

11 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 11 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

12 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 12 Delegation ●Process managers use to transfer authority and responsibility ●Organizations encourage managers to delegate authority to lowest possible level

13 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 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

14 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 14 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

15 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 15 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 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

16 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 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

17 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 17 Centralization versus 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.

18 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 18 Departmentalization The basis on which individuals are grouped into departments  Vertical functional structure. People are grouped together in departments by common skills.  Divisional structure. Grouped together based on a common product, program, or geographical region.  Matrix structure. Functional and divisional chains of command. Some employees report to two bosses.  Team-based structure. Created to accomplish specific tasks.

19 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 19 Virtual Network Structure An organizational structure that disaggregates major functions to separate companies that are brokered by a small headquarters organization.

20 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 20 Five Approaches to Structural Design Exhibit 10.3

21 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 21 Five Approaches to Structural Design Slide 2 Exhibit 10.3

22 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 22 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

23 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 23 Divisional Structure Advantages Efficient use of resources Skill specialization development Top management control Excellent coordination Quality technical problem solving

24 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 24 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

25 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 25 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

26 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 26 Dual Authority Structure in a Matrix Organization Exhibit 10.6

27 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 27 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

28 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 28 Team Advantages Same advantages as functional structure Reduced barriers among departments Quicker response time Better morale Reduced administrative overhead

29 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 29 Team Disadvantages Dual loyalties and conflict Time and resources spent on meetings Unplanned decentralization

30 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 30 Virtual Network Approach Advantages Can draw on expertise worldwide Work force flexibility Reduced administrative overhead

31 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 31 Network Approach Disadvantages Lack of control, weak boundaries Greater demands on managers Employee loyalty weakened

32 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 32 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

33 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 33 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

34 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 34 Factors Shaping Structure Exhibit 10.13


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