1. Designing Adaptive Organizations
Chapter 7
Designing Adaptive Organizations 1

2. Major Concerns in Organizing
Division of Labor (Differentiation)
Coordination (Integration)
In Reference to the Organizational Chart, Organizing Involves:
VERTICAL STRUCTURE
Coordination from Top to Bottom
HORIZONTAL STRUCTURE
Departmentalization (Who works together?) 2

3. Work Specialization
Degree to which tasks are subdivided into individual jobs
A highly specialized job is narrow in scope
Increases efficiency up to a point
With extreme specialization, workers tend to become bored and alienated 5

4. Chain of Command
The line of authority, shown in the organization chart, that links all persons and shows who reports to whom.
CEO
VP Marketing
VP Production
VP Finance 6

5. Authority Responsibility
Managers have authority because of the positions they hold (not who they are)
To be effective, it must be accepted by subordinates.
Responsibility
Duty to perform the task an employee has been assigned
Authority should be commensurate with responsibility. 7

6. Delegation
Process to transfer authority and responsibility to positions below
Delegation does not reduce responsibility
Benefits both the organization and the individual employee 11

7. Common Practice is to: CENTRALIZE (authority at top)
Accounting
Finance
Human Resources Management
Information Systems
DECENTRALIZE (much delegation)
Production
Marketing

8. Span of Management Number of employees reporting to a supervisor
Tradition has recommended a span of management of four to seven subordinates
What is best depends on the situation 14

9. Departmentalization
Basis for grouping job positions into departments and departments into the total organization.
Internal Operations Oriented
Functional
Network (Virtual)
Output Oriented
Divisional
Product
Geographic
Customer
Team (Cluster)
Combinations
Hybrid (different types at different places in an org.)
Matrix (different types at simultaneous at the same places in an org.)

10. Functional Approach Departments based on similar activities, skills and resource use.
Advantages:
Efficient use of resources
Economies of Scale
In-depth skill specialization
Disadvantages:
Poor communication among departments
Slow response to external changes
Loyalty more to function than customer or the whole organization 24

11. Divisional Approach
Departments are grouped together based on organizational outputs (e.g., product, geography, customer)
Functions (e.g., marketing) are split among the divisions
Its advantages and disadvantages tend to be the opposite of those of the functional approach 26

12. Divisions Advantages: Disadvantages:
Quicker changes in an unstable environment
More in touch with customers
Disadvantages:
Duplication
Competition for resources among divisions
More managers needed
Less professional specialization 28

13. Matrix Approach
Functional and divisional chains of command simultaneously
Violates the unity of command concept. 31

14. Matrix Structure - Why?
To get the advantages of both Functional and Divisional Structures
Sophisticated technology, fast-changing environment
Diverse products and geographical areas

15. Disadvantages of Matrix
Many meetings to coordinate activities
High conflict between two sides of matrix
Need for extensive human relations training 33

16. Team Approach
Cross-functional teams (Clusters) consist of employees from various functional departments
Teams typically have more decision making power than previously held by workers at their levels. 34

17. Team Approach Advantages Disadvantages Quicker response time
Better morale
Reduced administrative overhead
Disadvantages
Conflict
Time and resources spent on meetings 34

18. Network (Virtual) Approach
Organization divides major functions among separate companies brokered by a small headquarters organization
Somewhat like a functional organization. 37

19. Network Approach Advantages Disadvantages
Increases competitiveness, especially of small firms
Flexibility
Reduced Costs
Disadvantages
No hands-on control
Loyalty weakened. 38

20. Mechanistic vs. Organic Organizations
Vertical vs. Horizontal Structural Dominance
Rigid vs. Flexible
Specialized Jobs vs. Unspecialized
Boss Control vs. Self-Control
Centralized Decisions vs. Decentralized
Bureaucratic vs. Non-bureaucratic

21. Departmentalization Types
(From most Mechanistic to most Organic)
Functional
Functional with integrators, cross-functional committees, etc.
Matrix
Divisional
Team

22. When the Mechanistic (Vertical) Approach is most Appropriate:
External Environment is: Stable
Growth and Innovation Goals are:
Few or Nonexistent (Internal Stability)
The Organization’s Size is: Large
The Technology is: Mass Production (or involving low-level skills)

23. When the OrganicApproach is most Appropriate:
External Environment is: Unstable
Growth and Innovation Goals are: Numerous
Technology is:
Small Batch
Continuous Process
Flexible Manufacturing (Computer Assisted)
Service, especially professional service jobs.

24. Service Technology
Tends to be more Organic (Horizontal) than manufacturing
Employees have direct contact with customers
Output of the firm is intangible
Production and consumption are simultaneous 22