MANAGEMENT RICHARD L. DAFT

Designing Adaptive Organizations Designing Adaptive Organizations CHAPTER 9

Learning Outcomes 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. 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. Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

What are Your Leadership Beliefs? Personal beliefs about the role of leadership impact a new manager A manager’s work is influenced by how the organization is organized Organizational systems should be compatible with leadership beliefs Good managers understand and learn to work within a variety of structural configurations Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Organizing Organizing follows from strategy Organizing follows from strategy Strategy dictates what you do Organization dictates how you do it Organizing is the deployment of organizational resources to achieve strategic goals Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Organizing The Vertical Structure The set of formal tasks assigned to individuals and departments Formal reporting relationships, including lines of authority, decision responsibility, number of levels and span of control The design of systems to ensure effective coordination of employees across departments Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Organizing Concepts Work Specialization – the division tasks into individual jobs called division of labor Chain of Command – a line of authority that links individuals and direct reports Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Authority, Responsibility, and Delegation The chain of command illustrates authority Authority is the formal and legitimate right to make decisions and issues orders Authority is vested in organizational positions, not people Authority is accepted by subordinates Authority flows down the vertical hierarchy Responsibility is the duty to perform the task or activity assigned Delegation is the process managers use to transfer authority and responsibility to others Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Line and Staff Authority Line departments perform the tasks that reflect the organization’s primary goals They work directly with customers/products Staff departments are those departments that provide specialized skills in support of line departments Legal, Human Resources, Marketing Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Organizing Chart for a Water Bottling Plant Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Span of Management The number of employees reporting to a supervisor is span of management Factors associated with less supervisor involvement and larger span of control Work is stable and routine Subordinates perform similar work Subordinates in single location Highly trained and need little direction Rules and procedures are defined Support systems and personnel are available to manager Little supervision is required Managers’ personal preference favor a large span Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Reorganization to Increase Span of Management Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Centralization and 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 Change and uncertainty are usually associated with decentralization The amount of centralization or decentralization should fit the firm’s strategy During crisis or risk of company failure, authority may be centralized Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Departmentalization Basis for grouping positions into departments Basis for grouping positions into departments Choices regarding chain of command Five traditional approaches: Functional Divisional Matrix Innovative approaches: Teams Virtual Networks Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Approaches to Structural Design Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Approaches to Structural Design Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Vertical Functional Approach Grouping into departments based on skills, expertise, work activities and resource use Departmentalized by organizational resources Accounting Human resources Engineering Manufacturing Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Divisional Approach Departments are grouped based on outputs Departments are grouped based on outputs Product structure, program structure, self-contained unit structure Many large corporations have multiple divisions for different business lines Organizations may assign division responsibility by geographic region or customer group Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Functional Versus Divisional Approach Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Geographic-Based Global Organization Structure Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Matrix Approach Combines aspects of both functional and divisional structures simultaneously Improves coordination and information sharing A key challenge is the dual lines of authority Employees report to two supervisors Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Dual-Authority Structure in a Matrix Organization Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Global Matrix Structure Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Team Approach Teamwork is a growing trend Teamwork is a growing trend Teams allow organizations to delegate authority Become flexible and competitive in global environment Organizations may use cross-functional and/or permanent team strategies Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

The Virtual Network Approach Extending the boundaries of collaboration beyond the organization Subcontracting functions to other companies Coordinate activities Interconnected groups of companies partnerships and collaborations Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Network Approach to Departmentalization Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Structural Advantages and Disadvantages Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

The Need for Coordination Organizations grow and evolve Organizations need systems to process information and enable communication Coordination is the quality of collaboration across departments Coordination is required, regardless of the structure Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Evolution of Organization Structures Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Task Forces, Teams, and Project Management Project Managers are responsible for coordinating the activities of several departments on a full-time basis for the completion of a specific project Task Force A temporary team or committee formed to solve a specific short-term problem Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Examples of Project Manager Relationships Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Reengineering Reengineering or business process reengineering Reengineering or business process reengineering Radical redesign of business processes to achieve dramatic improvements Cost Quality Service Speed Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Reengineering at Michigan Casting Center Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Structure Follows Strategy The right structure is designed to fit the organization’s strategy Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.