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Designing Adaptive OrganizationsDesigning Adaptive Organizations
CHAPTER 10CHAPTER 10
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Learning ObjectivesLearning Objectives
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 tostructure.
Explain the matrix approach to structure and its
application to both domestic and international
organizations.
Describe the contemporary team and virtual networkstructures and why they are being adopted by
organizations.
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Learning Objectives (contd.)Learning Objectives (contd.)
Explain why organizations need coordinationacross departments and hierarchical levels, anddescribe mechanisms for achieving
coordination. Identify how structure can be used to achieve
an organizations strategic goals.
Illustrate how organization structure can bedesigned to fit environmental uncertainty.
Define production technology (manufacturing,service, and digital) and explain how itinfluences organizational structure.
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OrganizingOrganizing
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
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Organization StructureOrganization Structure
Defines how tasks are divided, resourcesare deployed, and departments arecoordinated
Set of formal tasks assignedFormal reporting relationships
The design of systems to ensure effectivecoordination of employees acrossdepartments
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The Organization ChartThe Organization Chart
Visual representation
Set of formal tasks
Formal reporting relationships
Framework for vertical control
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Work SpecializationWork Specialization
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
Division of labor concept
Degree to which
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Chain of CommandChain 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
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
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AuthorityAuthority
Formal and legitimate right of a manager tomake decisions and issue orders
Allocate resources to achieve organizationallydesired outcomes
Authority is distinguished by threecharacteristics Authority is vested in organizational positions, not
people
Authority is accepted by subordinates Authority flows down the vertical hierarchy
Formal and legitimate right of a manager tomake decisions and issue orders
Allocate resources to achieve organizationallydesired outcomes
Authority is distinguished by threecharacteristics Authority is vested in organizational positions, not
people
Authority is accepted by subordinates Authority flows down the vertical hierarchy
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ResponsibilityResponsibility
The duty to perform the task or
activity an employee has been
assigned
Managers are assigned authority
commensurate with responsibility
Flip side of the authority coin
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AccountabilityAccountability
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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DelegationDelegation
Process managers use to transfer
authority and responsibility
Organizations encouragemanagers to delegate authority to
lowest possible level
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Line and Staff AuthorityLine 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
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Span of Management/Span of Control
Span of Management/Span of Control
Number of employees who report to asupervisor 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 belarge
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Factors Associated With Less SupervisorInvolvement
Factors Associated With Less SupervisorInvolvement
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
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 StructureTall 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 ofcontrol
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Centralization versus DecentralizationCentralization versus Decentralization
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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DepartmentalizationThe basis on which individuals are grouped into departments
DepartmentalizationThe basis on which individuals are grouped into departments
Vertical functional structure. People aregrouped together in departments by commonskills.
Divisional structure. Grouped together basedon a common product, program, orgeographical region.
Matrix structure. Functional and divisionalchains of command. Some employees reportto two bosses.
Team-based structure. Created toaccomplish specific tasks.
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Virtual Network StructureVirtual Network Structure
An organizational structure that
disaggregates major functions to
separate companies that are brokeredby a small headquarters organization.
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Five Approaches to Structural DesignFive Approaches to Structural Design
Exhibit 10.3
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Five Approaches to Structural DesignSlide 2
Five Approaches to Structural DesignSlide 2
daft ch10 insert1.CLP
Exhibit 10.3
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Vertical Functional ApproachVertical Functional Approach
Grouping of positions into departmentsbased on similar skills, expertise, andresource use Information flows up and down
Chain of command converges at the top
Managers and employees are compatiblebecause of similar training and expertise
Rules and procedures governing duties and
responsibilities
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Divisional Structure AdvantagesDivisional Structure Advantages
Efficient use of resources
Skill specialization development
Top management control
Excellent coordination
Quality technical problem solving
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Divisional Structure DisadvantagesDivisional 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
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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
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Dual Authority Structure in a Matrix OrganizationDual Authority Structure in a Matrix Organization
Exhibit 10.6
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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
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Team Advantages
Same advantages as functional
structure
Reduced barriers among
departments
Quicker response time
Better morale
Reduced administrative
overhead
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Team Disadvantages
Dual loyalties and conflict
Time and resources spent on
meetings
Unplanned decentralization
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Virtual Network Approach Advantages
Can draw on expertise worldwide
Work force flexibility
Reduced administrativeoverhead
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Network Approach Disadvantages
Lack of control, weak boundaries
Greater demands on managers
Employee loyalty weakened
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Task Forces, Teams, Project ManagementTask 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
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ReengineeringReengineering
Radical redesign of business processes
to achieve dramatic improvements in
cost, quality, service, and speed
Process = organized group of relatedtasks and activities that work together to
transform inputs into outputs and create
value
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Factors Shaping StructureFactors Shaping Structure
Exhibit 10.13