MGMT5
9
Designing Adaptive
Organizations
© 2012 Cengage Learning
1. describe the departmentalization approach to
organizational structure
2. explain organizational authority
3. discuss the different methods for job design
4. explain the methods that companies are using
to redesign internal organizational processes
(i.e., intraorganizational processes)
5. describe the methods that companies are using
to redesign external organizational processes
(i.e., interorganizational processes).
© 2012 Cengage Learning
Structure and Process
• Organizational structure
– the vertical and horizontal configuration of
departments, authority, and jobs within a company
• Organizational process
– the collection of activities that transform inputs into
outputs that customers value
© 2012 Cengage Learning
Sony Corporation’s
Organizational Chart
© 2012 Cengage Learning
Process View of
Microsoft’s Organization
© 2012 Cengage Learning
Designing Organizational
Structures
1. describe the departmentalization approach
to organizational structure
2. explain organizational authority
3. discuss the different methods for job design
© 2012 Cengage Learning
Departmentalization
• Functional
• Product
• Customer
• Geographic
• Matrix
© 2012 Cengage Learning
Functional
Departmentalization
• Advantages
– allows work done by highly qualified specialists
– lowers costs by reducing duplication
– makes communication and coordination easier
• Disadvantages
– cross-department coordination can be difficult
– may lead to slower decision making
© 2012 Cengage Learning
Functional
Departmentalization
© 2012 Cengage Learning
Product Departmentalization
• Advantages
– allows people to specialize in one area of expertise
– makes it easier to assess performance
– makes decision making faster
• Disadvantages
– duplication
– coordination across different product departments
© 2012 Cengage Learning
Product Departmentalization:
United Technologies
© 2012 Cengage Learning
Customer Departmentalization
• Advantages
– focuses organization on customer needs
– allows companies to specialize products and services
to customer needs
• Disadvantages
– duplication of resources
– workers might please customers but hurt business
© 2012 Cengage Learning
Customer Departmentalization:
Swisscomm AG
© 2012 Cengage Learning
Geographic Departmentalization
• Advantages
– helps companies respond to different markets
– reduces costs by locating unique resources closer to
customers
• Disadvantages
– duplication of resources
– difficult to coordinate departments
© 2012 Cengage Learning
Geographic
Departmentalization: AB
InBev Company
© 2012 Cengage Learning
Matrix Departmentalization
• Advantages
– allows companies to efficiently manage large,
complex tasks
– gives much more diverse set of expertise and
experience
• Disadvantages
– requires a high level of duplication
– confusion and conflict between project bosses
– requires much more management skill
© 2012 Cengage Learning
Matrix Departmentalization:
Procter & Gamble
© 2012 Cengage Learning
Chain of Command
• Chain of command
– the vertical line of authority that clarifies who reports
to whom throughout the organization
• Unity of command
– workers should report to just one boss
© 2012 Cengage Learning
Authority
• Line authority
• Staff authority
• Line function
• Staff function
© 2012 Cengage Learning
Delegation: Responsibility,
Authority, and Accountability
© 2012 Cengage Learning
Degree of Centralization
• Centralization of authority
• Decentralization
• Standardization
© 2012 Cengage Learning
Advantages of Decentralization
• Develops employee capabilities
• Faster decision making
• More satisfied employees and customers
• Better employee performance
© 2012 Cengage Learning
Job Specialization
• Job comprises a smaller part of a larger task
• Easy to learn
• Low variety
• High repetition
© 2012 Cengage Learning
Job Rotation, Enlargement,
Enrichment
• Rotation
• Enlargement
• Enrichment
© 2012 Cengage Learning
Job Characteristics Model
© 2012 Cengage Learning
Internal Motivation
• Experience work as meaningful
• Experience responsibility for work outcomes
• Knowledge of results
© 2012 Cengage Learning
Core Job Characteristics
• Skill variety
• Task identity
• Task significance
• Autonomy
• Feedback
© 2012 Cengage Learning
To Increase Internal Motivation
• Combine tasks
• Natural work units
• Establish client relationships
• Vertical loading
• Open feedback channels
© 2012 Cengage Learning
Designing Organizational
Processes
4. explain the methods that companies are
using to redesign internal organizational
processes (i.e., intraorganizational processes)
5. describe the methods that companies are
using to redesign external organizational
processes (i.e., interorganizational processes)
© 2012 Cengage Learning
Intraorganizational Processes
The collection of activities that take place within an
organization to transform inputs into outputs that
customers value.
© 2012 Cengage Learning
Reengineering
“the fundamental rethinking and radical
redesign of business processes to
achieve dramatic improvements in
critical, contemporary measures of
performance, such as cost, quality,
service and speed.”
© 2012 Cengage Learning
Reengineering and Task
Interdependence
© 2012 Cengage Learning
Empowerment
• Empowering workers
• Empowerment
© 2012 Cengage Learning
Interorganizational Processes
A collection of activities that occur among
companies to transform inputs into outputs that
customers value.
© 2012 Cengage Learning
Modular Organizations
© 2012 Cengage Learning
Modular Organizations
• Advantages
– reduced costs
• Disadvantages
– loss of control
– noncore activities that are outsourced may become
source of advantage
– suppliers to whom work is outsourced can become
competitors
© 2012 Cengage Learning
Virtual Organizations
© 2012 Cengage Learning
Virtual Organizations
• Advantages
– shared costs
– fast and flexible
• Disadvantages
– difficult to control quality of work done by
partners
– requires tremendous managerial skills
© 2012 Cengage Learning
REELTOREAL
Rendition
1.
<click screenshot for video>
How would you describe the
workplace atmosphere in this
scene? Would you say it
demonstrates behavioral
informality or formality?
2. Do you think the scene shows
line authority or staff
authority between these two
men?
3. What kind of feedback is Alan
Smith getting from Senator
Hawkins? Is it primarily
positive or negative?
© 2012 Cengage Learning
REELTOREAL
Modern Shed
1.
2.
<click screenshot for video>
© 2012 Cengage Learning
Describe how Modern Shed
functions as a modular
organization.
What are the advantages and
disadvantages of Modern Shed’s
organizational structure?