1. RESTRUCTURING ORGANIZATIONS

2. Learning Objectives
To understand the basic principles of techno structural 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. What Is Organizational Structure?
How job tasks are formally divided, grouped, and coordinated
Key Elements
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization

4. What Is Organizational Structure? (cont’d)
Work Specialization
The degree to which tasks in the organization are subdivided into separate jobs
Division of Labor
Makes efficient use of employee skills
Increases employee skills through repetition
Less between-job downtime increases productivity
Specialized training is more efficient
Allows use of specialized equipment

5. What Is Organizational Structure? (cont’d)
Departmentalization
The basis by which jobs are grouped together
Grouping Activities by:
Function
Product
Geography
Process
Customer

6. What Is Organizational Structure? (cont’d)
Authority
The rights inherent in a managerial position to give orders and to expect the orders to be obeyed
Chain of Command
The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom
Unity of Command
A subordinate should have only one superior to whom he or she is directly responsible

7. What Is Organizational Structure? (cont’d)
Span of Control The number of subordinates a manager can efficiently and effectively direct
Concept
Wider spans of management increase organizational efficiency
Narrow Span Drawbacks
Expense of additional layers of management
Increased complexity of vertical communication
Encouragement of overly tight supervision and discouragement of employee autonomy

8. Contrasting Spans of Control

9. What Is Organizational Structure? (cont’d)
Centralization
The degree to which decision making is concentrated at a single point in the organization.
Decentralization
The degree to which decision making is spread throughout the organization.
Formalization
The degree to which jobs within the organization are standardized.

10. Contingencies Influencing
Structural Design
Environment
Worldwide
Operations
Organization
Size
Structural
Design
Organization
Goals
Technology

11. Functional Organization

12. The Functional Form Advantages Disadvantages
Emphasizes routine tasks; encourages short time horizons
Fosters narrow perspectives by managers and limits capacity for top-management positions
Multiplies interdepartmental dependencies; increases coordination and scheduling difficulties
Obscures accountability for overall results
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

13. The Divisional Organization

14. The Divisional Form Advantages Disadvantages
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
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

15. The Matrix Organization

16. The Matrix Structure Advantages Disadvantages
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
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

17. 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

18. The Process-Based Structure

19. The Process-Based Form
Advantages
Disadvantages
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

20. The Customer Centric Structure

21. The Customer Centric Form
Advantages
Presents one integrated face to the customer
Generates a deep understanding of customer requirements
Enables organization to customize and tailor solutions for customers
Builds a robust customer response capability
Disadvantages
Customer teams can be too
inwardly focused
Sharing learning and developing
functional skills is difficult
Managing lateral relations
between customer-facing and
back office units is difficult
Developing common processes
front and back is problematic
Clarifying the marketing function
is problematic

22. The Network Organization
Designer
Organizations
Producer
Organizations
Broker
Organization
Distributor
Organizations
Supplier
Organizations

23. Types of Networks Internal Market Network Vertical Market Network
Intermarket Network
Opportunity Network

24. The Network-Based Form
Advantages
Disadvantages
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

25. 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

26. Downsizing Tactics

27. 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.

28. 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