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D: Chapter 10 Designing Adaptive Organizations. Organizing The deployment of organizational resources to achieve strategic goals Reflects deployment of.

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Presentation on theme: "D: Chapter 10 Designing Adaptive Organizations. Organizing The deployment of organizational resources to achieve strategic goals Reflects deployment of."— Presentation transcript:

1 D: Chapter 10 Designing Adaptive Organizations

2 Organizing The deployment of organizational resources to achieve strategic goals Reflects deployment of resources Shows division of labor Formal lines of authority and mechanisms is developed

3 Organization Structure  Defines how tasks are divided, resources are deployed, and departments are coordinated  The set of formal tasks assigned  Formal reporting relationships  The design of systems to ensure effective coordination of employees across department

4 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

5 Work Specialization Tasks are subdivided into individual jobs Division of labor concept Employees perform only the tasks relevant to their specialized function Jobs tend to be small, but they can be performed efficiently

6 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

7 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

8 Responsibility The duty to perform the task or activity an employee has been assigned Managers are assigned authority commensurate with responsibility

9 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

10 Delegation  Process managers use to transfer authority and responsibility  Organization encourage managers to delegate authority to lowest possible level 1 2

11 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

12 Line and Staff Positions Line vs. staff positions Line vs. staff authority Advantages and complexities of using staff positions

13 President Legal Department Vice-President, Production Vice-President, Marketing Vice President, Accounting Department A Department B Department C Line authority Staff authority TM 8-8 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998 TYPES OF AUTHORITY

14 Span of Management Number of employees who report to a supervisor Traditional view, about seven subordinates per manager Many lean organizations today have 30, 40, or even higher subordinates When supervisors must be closely involved with subordinates, the span should be small Supervisors need little involvement with subordinates, it can be large

15 Factors Influencing the Span Supervisor Preferences and skills Few non-supervisory duties Subordinates Competence and needs Job Work similarity physical proximity Low interaction requirements

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 SPAN OF MANAGEMENT Org. Level MEMBERS AT EACH LEVEL Span of 4 Operatives : 4,096 Managers : 1,396 Span of 8 Operatives : 4,096 Managers : 585 TM 8-6 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998 (highest) ,024 4, ,096

18 Centralization vs. Decentralization The extend to which the power and authority is retained at the top vs. delegated to lower levels. Factors influencing… Size of the organization Geographic dispersion Technological complexity Environmental uncertainty

19 CENTRALIZATION DECENTRALIZATION Decision-making small centralized simple certain size geographics technology environment large dispersed complex uncertain factors TM 8-7 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998 Restrictive policies, rules, procedures General policies, rules, procedures

20 Decentralization Tends To … Make greater use of human resources Reduce burdens of top managers Cause decisions to be made close to the action Permit rapid response to changes

21 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  Virtual Network approach. An organization structure that disaggregates major functions to separate companies that are brokered by a small headquarters organizations.

22 Five Approaches to Structural Design

23 Five Approaches to Structural Design Slide 2

24 Functional Structure Advantages Efficient use of resources Skill specialization development Top management control Excellent coordination Quality technical problem solving

25 Functional 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

26 Divisional Structure Advantages Fast response, flexibility in an unstable environment Fosters concern for customers’ needs Excellent coordination across functional departments Emphasis on overall product and divisional goals Development of general management skills

27 Divisional Structure Disadvantages Duplication of resources across divisions Less technical depth and specialization in divisions Poor coordination across divisions Less top management control Competition for corporate resources

28 Horizontal Matrix Advantages More efficient use of resources than divisional structure Adaptable to changing environment Development of both general and specialists management skills Expertise available to all divisions Enlarged tasks for employees

29 Dual Authority Structure in a Matrix Organization

30 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

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

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

33 Virtual Network Advantages Can draw on expertise worldwide Highly flexible and responsive Reduced overhead costs Disadvantages Lack of control, weak boundaries Greater demand on managers Weakened employee loyalty

34 Chapter Outline The horizontal organization The need for coordination Task force, teams and project management

35 Organizing for Horizontal Coordination Quality of collaboration across departments The need for coordination

36 Structural Design Task Force...A temporary team or committee formed to solve a specific short-term problem Team…Participants from several departments who meet to solve ongoing problems Project Manager…A person responsible for coordinating the activities of several departments

37 Evolution of Organization Structures Traditional Vertical Structure Teams and Project Managers for Horizontal Coordination Reengineering to Horizontal Processes New Workplace Learning Organization

38 Factors Influencing Organizational Structure Interdependence Strategy Environment Technology Traditional Vertical Structure New Horizontal Structure Company Performance

39 Strategy & Structure Which Comes first—strategy or structure? Form follows function But, once the form is in place, it impacts the function.

40 Structure Follows Strategy Differentiation strategy, organization attempts to develop innovative products Cost leadership strategy, striving for internal efficiency

41 Traditional Vertical Organization Strategic Goals Horizontal Teams Relationship of Strategic Goals to Structural Approach Strategic Goals: Cost leadership, efficiency, stability Differentiation, innovations, flexibility

42 Three Things Happen Due To Uncertain Environments 1. Increased differences occur among departments 2. The organization needs increased coordination to keep departments working together 3. The organization must adapt to change

43 Structure Reflects the Environment Organic vs. Mechanistic Structure

44 Woodward’s Manufacturing Technology  Small batch and unit production  Large batch and mass production  Continuous process production

45 Manufacturing Technology and Organizational Structure

46 Interdependence The extent to which departments depend on each other for resources or materials to accomplish their tasks.

47 Types of Interdependence and Required Coordination


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