Chapter 9
Designing Adaptive
Organizations
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MGMT7
9-1 describe the departmentalization approach to
organizational structure
9-2 explain organizational authority
9-3 discuss the different methods for job design
9-4 explain the methods that companies are using to
redesign internal organizational processes (i.e.,
intraorganizational processes)
9-5 describe the methods that companies are using
to redesign external organizational processes
(i.e., interorganizational processes).
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Structure and Process
• Organizational structure
• Organizational process
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Thomson Reuters
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Process View of Microsoft’s Organization
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Departmentalization
• Functional
• Product
• Customer
• Geographic
• Matrix
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9-1
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
9-1
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Functional Departmentalization
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9-1
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
9-1
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Product Departmentalization: UTC
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9-1
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
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9-1
Customer Departmentalization: Swisscom AG
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9-1
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
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9-1
Geographic Departmentalization: AB InBev
Company
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9-1
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
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9-1
Matrix Departmentalization: Procter & Gamble
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9-1
Chain of Command
• Chain of command
• Unity of command
9-2
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Authority
• Line authority
• Staff authority
• Line function
• Staff function
9-2
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Delegation
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9-2
Degree of Centralization
• Centralization of authority
• Decentralization
• Standardization
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9-2
Advantages of Decentralization
• Develops employee capabilities
• Faster decision making
• More satisfied employees and customers
• Better employee performance
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9-2
Job Specialization
• Job comprises a smaller part of a larger
task
• Easy to learn
• Low variety
• High repetition
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9-3
Job Rotation, Enlargement,
Enrichment
• Rotation
• Enlargement
• Enrichment
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9-3
Job Characteristics Model
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9-3
Internal Motivation
• Experience work as meaningful
• Experience responsibility for work
outcomes
• Knowledge of results
9-3
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Core Job Characteristics
• Skill variety
• Task identity
• Task significance
• Autonomy
• Feedback
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9-3
To Increase Internal Motivation
• Combine tasks
• Natural work units
• Establish client relationships
• Vertical loading
• Open feedback channels
9-3
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Intraorganizational Processes
The collection of activities that take
place within an organization to
transform inputs into outputs that
customers value.
9-4
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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.”
9-4
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Reengineering and Task Interdependence
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9-4
Empowerment
• Empowering workers
• Empowerment
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9-4
Interorganizational Processes
A collection of activities that occur among
companies to transform inputs into
outputs that customers value.
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9-5
Modular Organization
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9-5
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
9-5
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Virtual Organizations
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9-5
Virtual Organizations
• Advantages
– shared costs
– fast and flexible
• Disadvantages
– difficult to control quality of work done by
partners
– requires tremendous managerial skills
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9-5
Modern Shed
<click screenshot for video>
1. Describe how Modern
Shed functions as a
modular organization.
2. What are the
advantages and
disadvantages of
Modern Shed’s
organizational
structure?
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