1. Designing Adaptive Organizations
Chapter 10

2. 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
Manager’s Challenge: Nissan

3. Designing Adaptive Organizations
Topics
Chapter 10
Organizing Principles and Concepts
Organizing the Vertical Structure
Using Mechanisms for Horizontal Coordination
Tailoring Various Elements of Structural Design to Organizational Situations

4. 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 department

5. The Organization Chart
Visual representation
“The Home Depot is the world's largest home improvement retailer currently operating 1,363 stores.
Set of formal tasks
Framework for vertical control
Formal reporting relationships

6. Division of labor concept
Work Specialization
Division of labor concept
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

7. 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

8. 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

9. Responsibility
Flip side of the authority coin
The duty to perform the task or activity an employee has been assigned
Managers are assigned authority commensurate with responsibility

10. 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

11. Delegation
Process managers use to transfer authority and responsibility
Organizations encourage managers to delegate authority to lowest possible level
Ethical Dilemma: A Matter of Delegation

12. Techniques for Delegation
Give thorough instructions
Maintain feedback
Evaluate and reward performance
Techniques for Delegation
Ensure that authority equals responsibility
Delegate the whole task
Select the right person

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. 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. 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

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. Centralization versus Decentralization
Greater change and uncertainty in the environment are usually associated with decentralization
The amount of centralization or decentralization should fit the firm’s strategy
In times of crisis or risk of company failure, authority may be centralized at the top

18. 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

19. Departmentalization The basis on which individuals are grouped into departments
Network approach. Small, central hub electronically connected to their other organizations that perform vital functions. Departments are independent, and can be located anywhere.
Virtual approach. Brings people together temporarily to exploit specific opportunities then disbands

20. Five Approaches to Structural Design

21. Five Approaches to Structural Design Slide 2

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

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. Horizontal 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 32

26. Dual Authority Structure in a Matrix Organization

27. 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 33

28. Team Advantages Same advantages as functional structure
Reduced barriers among departments
Quicker response time
Better morale
Reduced administrative overhead 35

29. Team Disadvantages Dual loyalties and conflict
Time and resources spent on meetings
Unplanned decentralization 36

30. Network Approach Advantages
Global competitiveness
Work force flexibility
Reduced administrative overhead 38

31. Network Approach Disadvantages
No hands-on control
Loss of part of the organization severely impacts remainder of organization
Employee loyalty weakened 39

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. 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. Factors Shaping Structure
Follows Strategy
Reflects the Environment
Fits the Technology
Service Technology
Digital Technology
Experiential Exercixe: Organic versus Mechanistic Organization Structure