Designing Adaptive Organizations
CHAPTER 10
Learning Objectives
2
Discuss the fundamental characteristics of organizing,
including such concepts as work specialization, chain of
command, span of management, and centralization
versus decentralization.
Describe functional and divisional approaches to
structure.
Explain the matrix approach to structure and its
application to both domestic and international
organizations.
Describe the contemporary team and virtual network
structures and why they are being adopted by
organizations.
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Learning Objectives (contd.)
3
Explain why organizations need coordination
across departments and hierarchical levels, and
describe mechanisms for achieving
coordination.
Identify how structure can be used to achieve
an organization’s strategic goals.
Illustrate how organization structure can be
designed to fit environmental uncertainty.
Define production technology (manufacturing,
service, and digital) and explain how it
influences organizational structure.
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Organizing
Organization is the deployment of resources to
achieve strategic goals.
It is reflected in
–
–
–
4
Division of labor into specific departments & jobs
Formal lines of authority
Mechanisms for coordinating diverse organizational
tasks
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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
departments
5
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The Organization Chart
Visual representation
Set of formal tasks
Framework for vertical control
Formal reporting relationships
6
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Work Specialization
Division of labor concept
Degree to which
7
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
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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
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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
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Responsibility
Flip side of the authority coin
10
The duty to perform the task or
activity an employee has been
assigned
Managers are assigned authority
commensurate with responsibility
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Accountability
11
●
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
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Delegation
●Process managers use to transfer
authority and responsibility
●Organizations encourage
managers to delegate authority to
lowest possible level
12
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Line and Staff Authority
13
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
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Span of Management/
Span of Control
Number of employees who report to a
supervisor
–
–
Supervisor Involvement
–
–
14
Traditional view = seven subordinates per manager
Lean organizations today = 30+ subordinates
must be closely involved with subordinates, the
span should be small
need little involvement with subordinates, it can be
large
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Factors Associated With Less Supervisor
Involvement
15
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
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Tall versus Flat Structure
16
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
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Centralization versus Decentralization
17
Centralization means that decision
authority is located near the top of the
organization.
Decentralization means decision
authority is pushed downward to lower
organizational levels.
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Departmentalization
The basis on which individuals are grouped into departments
18
Vertical functional structure. People are
grouped together in departments by common
skills.
Divisional structure. Grouped together based
on a common product, program, or
geographical region.
Matrix structure. Functional and divisional
chains of command. Some employees report
to two bosses.
Team-based structure. Created to
accomplish specific tasks.
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Virtual Network Structure
19
An organizational structure that
disaggregates major functions to
separate companies that are brokered
by a small headquarters organization.
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Five Approaches to Structural Design
Exhibit 10.3
20
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Five Approaches to Structural Design
Slide 2
Exhibit 10.3
21
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Vertical Functional Approach
Grouping of positions into departments
based on similar skills, expertise, and
resource use
●
●
●
●
22
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
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Divisional Structure Advantages
23
Efficient use of resources
Skill specialization development
Top management control
Excellent coordination
Quality technical problem solving
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Divisional Structure Disadvantages
24
Poor communications
Slow response to external changes
Decisions concentrated at top
Pin pointing responsibility is difficult
Limited view of organizational goals by
employees
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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
25
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Dual Authority Structure in a Matrix Organization
Exhibit 10.6
26
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Matrix Disadvantages
27
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
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Team Advantages
28
Same advantages as functional
structure
Reduced barriers among
departments
Quicker response time
Better morale
Reduced administrative
overhead
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Team Disadvantages
29
Dual loyalties and conflict
Time and resources spent on
meetings
Unplanned decentralization
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Virtual Network Approach Advantages
30
Can draw on expertise worldwide
Work force flexibility
Reduced administrative
overhead
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Network Approach Disadvantages
31
Lack of control, weak boundaries
Greater demands on managers
Employee loyalty weakened
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Task Forces, Teams, Project Management
32
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
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Reengineering
33
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
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Factors Shaping Structure
Exhibit 10.13
34
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