Title: Chapter 7 Designing Adaptive Organizations
1Chapter 7Designing Adaptive Organizations
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2Learning Objectives
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- 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.
3Learning Objectives (contd.)
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- 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
organizations 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.
4Organizing
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- Organization is the deployment of resources to
achieve strategic goals. - Division of labor
- Formal lines of authority
- Coordinating organizational tasks
5Organization Structure
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- How tasks are divided, resources are deployed,
and departments are coordinated - Set of formal tasks
- Formal reporting relationships
- Effective coordination of employees across
departments
6The Organization Chart
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Visual representation
Set of formal tasks
Framework for vertical control
Formal reporting relationships
7Organization Chart for a Water Bottling Plant
8Work Specialization
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- Division of labor
- Tasks are subdivided into jobs
- Employees perform specialized tasks
- Jobs are small but efficient
9Chain of Command
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- Line of authority that links all persons in an
organization - Shows who reports to whom
- Two underlying principles
- Unity of Command
- Scalar Principle
10Authority
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- 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
11Responsibility
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- Flip side of authority
- Duty to perform the task or activity an employee
has been assigned - Managers are assigned authority commensurate with
responsibility
12Accountability
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- Mechanism through which authority and
responsibility are aligned - Require reporting outcomes to those above them in
the chain of command - Built into the organization structure
13Delegation
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- Process managers use to transfer authority and
responsibility - Managers should delegate authority
14Line and Staff Authority
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- Line Authority - management with formal power to
direct and control immediate subordinates - Staff Authority - granted to staff specialists in
their area of expertise
15Span of Management/Span of Control
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- Number of employees who report to a supervisor
- Traditional view seven subordinates per manager
- Lean organizations today 30 subordinates
16Factors Associated With Less Supervisor
Involvement
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- 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
17Tall versus Flat Structure
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- Span of Control used in an organization
determines whether the structure is tall or flat - Tall structure have a narrow span and more levels
- Flat structure has a wide span and fewer levels
- The trend has been toward wider spans of control
18Centralization versus Decentralization
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- Centralization means that decision authority is
located near the top of the organization. - Decentralization means decision authority is
pushed downward to lower organizational levels.
19Centralization vs. Decentralization
- Greater change and uncertainty associated with
decentralization - Should fit the firms strategy
- In time of crisis, authority may be centralized
20(No Transcript)
21Departmentalization
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- Vertical functional structure
- Divisional structure
- Matrix structure
- Team-based structure
22Five Approaches to Structural Design
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Exhibit 10.3
Exhibit 7.3
23Five Approaches to Structural Design
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Exhibit 10.3
Exhibit 7.3
24Vertical Functional Approach
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- 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
25Divisional Structure Advantages
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- Efficient use of resources
- Skill specialization development
- Top management control
- Excellent coordination
- Quality technical problem solving
26Divisional Structure Disadvantages
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- Poor communications
- Slow response to external changes
- Decisions concentrated at top
- Pin pointing responsibility is difficult
- Limited view of organizational goals by employees
27Matrix Advantages
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- 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
28Dual Authority Structure in a Matrix Organization
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Exhibit 10.6
29Matrix Disadvantages
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- 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
30Team Advantages
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- Same advantages as functional structure
- Reduced barriers among departments
- Quicker response time
- Better morale
- Reduced administrative overhead
31Team Disadvantages
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- Dual loyalties and conflict
- Time and resources spent on meetings
- Unplanned decentralization
32Virtual Network Approach Advantages
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- Can draw on expertise worldwide
- Work force flexibility
- Reduced administrative overhead
33Network Approach Disadvantages
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- Lack of control, weak boundaries
- Greater demands on managers
- Employee loyalty weakened
34Task Forces, Teams, Project Management
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- 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
35Reengineering
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- 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
36Factors Shaping Structure
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Exhibit 10.13