Designing Adaptive Organizations Week 9

Chapter Outline Organizing Evolution of Organization Structure Vertical and Horizontal Advantages/ Disadvantages Evolution of Organization Structure Structure and Strategy Structure and Technology Types of Technology Manufacturing, service, digital

Organizing What? Organizational resources to achieve strategic goals Division of labor Lines of authority Coordination Link to Planning

Organizing the Vertical Structure Organizing Structure Defines: The set of formal tasks assigned to individuals and departments Formal reporting relationships The design of the systems to ensure effective coordination

Organizing the Vertical Structure Work Specialization Chain of Command

Organization Chart

Authority, Responsibility, and Delegation What is Authority? Formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve organizational outcomes. Authority is vested in positions, not people Authority is accepted by subordinates Authority flows down the vertical hierarchy Accountability Delegation

Line and Staff Authority Line departments perform primary tasks Ex: Shoes, clothing Sales Production Line Authority: Direct & control subordinates Staff departments support line departments Finance Human Resources Research Staff authority: advise, recommend specialist expertise

Span of Management Span of management? Determinants Subordinates similar work, single location, skills of subordinates, etc. Determines if the organization is a: Tall Structure Flat Structure

Reorganization and Span of Management

Centralization and Decentralization Factors: Greater change and uncertainty are usually associated with decentralization Centralization or decentralization should fit the firm’s strategy

Departmentalization: Functional & Divisional Functional Approach? Divisional Approach Grouping based on organizational output Product, Program, Business (self-contained unit) Geographic- or Customer-Based Divisions

Functional Versus Divisional Structures

Geographic-Based Global Organization Structure

Departmentalization: Matrix & Team Approach Matrix combines functional and divisional approaches Improve coordination and information Dual lines of authority

Matrix Structure

Global Matrix Structure

Team Approach Widespread trend in departmentalization Types Allows managers to delegate authority to lower levels, Flexible, responsive Types Cross-functional Permanent teams Horizontal coordination & communication

Virtual Network Approach Extends idea of horizontal coordination and collaboration Partnerships Alliances Could be a loose interconnected group i.e. outsourcing Virtual network structure means that the firm subcontracts most of its major functions to separate companies.

Network Approach to Departmentalization

Structural Advantages and Disadvantages

Organizing for Horizontal Coordination Lack of coordination and cooperation can cause information problems Horizontal Meet fast-shifting environment Break down barriers between departments Need integration and coordination

Task Forces, Teams, and Project Management a temporary team or committee formed to solve a specific short-term problem involving several departments Project Manager – a person responsible for coordinating the activities of several departments on a full-time basis for the completion of a specific project Cross-functional Team – furthers horizontal coordination by including members across the organization

Evolution of Organization Structures Traditional Vertical Structure Cross-Functional Teams and Project Managers Reengineering to Horizontal Teams

Structure Follows Strategy Business performance is influenced by the company’s structure Strategic goals should drive structure Structure should be used to facilitate strategic goals

Factors Affecting Organization Structure

Relationship of Structural Approach to Strategy and the Environment

Structure Fits the Technology Technology - knowledge, tools, techniques and activities Technology varies but it can impact structure Difference among three manufacturing technologies is technical complexity: Small-batch and unit production Large-batch and mass production Continuous process production

Manufacturing Technology and Organization Structure

Service Technology Service organizations: Examples. Service technology defined as: Intangible output Direct contact with customers Need more interaction/horizontal communication Digital technology is the use of the Internet and other digital processes to support business online.