Copyright ©2011 by Cengage Learning. All rights reserved 1 Chapter 9 Designing Adaptive Organizations Designed & Prepared by B-books, Ltd. MGMT3 Chuck Williams
Copyright ©2011 by Cengage Learning. All rights reserved 2 Organizational Structure The vertical and horizontal configuration of departments, authority, and jobs within a company. Organizational Process The collection of activities that transform inputs into outputs that customers value.
Copyright ©2011 by Cengage Learning. All rights reserved 3 Organizational Structure Process View of Microsoft’s Organization
Copyright ©2011 by Cengage Learning. All rights reserved 4 Designing Organizational Structures After reading these sections, you should be able to: 1.describe the departmentalization approach to organizational structure. 2.explain organizational authority. 3.discuss the different methods for job design.
Copyright ©2011 by Cengage Learning. All rights reserved 5 Departmentalization Customer Geographic Matrix Functional Product 1 1
Copyright ©2011 by Cengage Learning. All rights reserved 6 Functional Departmentalization 1.1
Copyright ©2011 by Cengage Learning. All rights reserved 7 AdvantagesDisadvantages Functional Departmentalization Work done by highly skilled specialists Lowers costs through reduced duplication Communication and coordination problems are lessened Cross-department coordination can be difficult May lead to slower decision making Produces managers with narrow experiences 1.1
Copyright ©2011 by Cengage Learning. All rights reserved 8 Product Departmentalization United Technologies Carrier Hamilton Sundstrand Chubb Otis Pratt & Whitney UTC Power --Administrative services --Communication & public relations --Customer service & support --E-Business --Engineering --etc… Sikorsky 1.2
Copyright ©2011 by Cengage Learning. All rights reserved 9 AdvantagesDisadvantages Product Departmentalization Managers specialize, but have broader experiences Easier to assess work- unit performance Decision-making is faster Duplication of activities Difficult to coordinate across departments 1.2
Copyright ©2011 by Cengage Learning. All rights reserved 10 Customer Departmentalization 1.3 Source: “Company Structure,” About Swisscom, available online at [accessed 14 November 2009].
Copyright ©2011 by Cengage Learning. All rights reserved 11 AdvantagesDisadvantages Customer Departmentalization Focuses on customer needs Products and services tailored to customer needs Duplication of resources Difficult to coordinate across departments Efforts to please customers may hurt the company 1.3
Copyright ©2011 by Cengage Learning. All rights reserved 12 Beyond the Book Dell’s Spotlight Now on Customers Traditionally, Dell’s core focus has been making PCs as efficiently as possible to sell at a discount to their competitors. Like most tech companies Dell organized itself around its products. Since the beginning of 2009, Dell has taken a different approach focusing around four customer groups: consumers, corporations, small and midsized businesses, and governments and educational buyers. Dell believes that an outward focus will empower managers to better respond to client needs. Source: C. Edwards, “Dell’s Do-Over”, Business Week, 26 October
Copyright ©2011 by Cengage Learning. All rights reserved 13 Geographic Departmentalization 1.4 Source: “Territories of Operation, 2007 Annual Report,” Coca-Cola Enterprises, available online at [accessed 7 September 2008].
Copyright ©2011 by Cengage Learning. All rights reserved 14 AdvantagesDisadvantages Geographic Departmentalization Responsive to the demands of different market areas Unique resources located close to the customer Duplication of resources Difficult to coordinate across departments 1.4
Copyright ©2011 by Cengage Learning. All rights reserved 15 Matrix Departmentalization 1.5 Source: “Corporate Info: Structure,” P&G, available online at [accessed 8 August 2008].
Copyright ©2011 by Cengage Learning. All rights reserved 16 AdvantagesDisadvantages Matrix Departmentalization Efficiently manage large, complex tasks Pool of available resources Requires high levels of coordination Conflict between bosses Requires high levels of management skills 1.5
Copyright ©2011 by Cengage Learning. All rights reserved 17 Organizational Authority Delegation of Authority Degree of Centralization Degree of Centralization Chain of Command Line versus Staff Authority 2 2
Copyright ©2011 by Cengage Learning. All rights reserved 18 Chain of Command The vertical line of authority in an organization Clarifies who reports to whom Unity of command –matrix organizations violate this principle –workers report to only one boss 2.1
Copyright ©2011 by Cengage Learning. All rights reserved 19 Line versus Staff Authority Line authority –the right to command immediate subordinates in the chain of command Staff authority –the right to advise but not command others 2.2
Copyright ©2011 by Cengage Learning. All rights reserved 20 Delegation of Authority The assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible. 2.3
Copyright ©2011 by Cengage Learning. All rights reserved 21 Delegation of Authority 2.3 © Studio DL/Corbis/Jupiterimages
Copyright ©2011 by Cengage Learning. All rights reserved 22 How to Be a More Effective Delegator 1.Trust your staff to do a good job. 2.Avoid seeking perfection. 3.Give effective job instructions. 4.Know your true interests. 5.Follow up on progress. 6.Praise the efforts of your staff. 7.Don’t wait to the last minute to delegate. 8.Ask questions, expect answers, assist employees. 9.Provide the resources you would expect if doing the assignment yourself. 10.Delegate to the lowest possible level. 2.3
Copyright ©2011 by Cengage Learning. All rights reserved 23 Degree of Centralization Centralization of authority primary authority is held by upper management Decentralization significant authority is found in lower levels of the organization Standardization solving problems by applying rules, procedures, and processes 2.4
Copyright ©2011 by Cengage Learning. All rights reserved 24 Job Design Specialized Jobs Job Rotation, Enlargement, Enrichment Job Characteristics Model 3 3
Copyright ©2011 by Cengage Learning. All rights reserved 25 Job Specialization A job that is a small part of a larger task or process Jobs are simple, easy to learn, & economical Can lead to low satisfaction, high absenteeism, & employee turnover 3.1
Copyright ©2011 by Cengage Learning. All rights reserved 26 Job Rotation, Enlargement, and Enrichment Job Rotation –periodically moving workers from one specialized job to another Job Enlargement –increasing the number of tasks performed by a worker Job Enrichment –adding more tasks and authority to an employee’s job 3.2
Copyright ©2011 by Cengage Learning. All rights reserved 27 Job Characteristics Model A job redesign approach that seeks to increase employee motivation Emphasizes internal motivation experience work as meaningful experience responsibility for work outcomes knowledge of results 3.3
Copyright ©2011 by Cengage Learning. All rights reserved 28 Job Characteristics Model 3.3
Copyright ©2011 by Cengage Learning. All rights reserved 29 Job Redesign Techniques Redesigning Jobs Combining Tasks Forming Natural Work Units Establishing Client Relationships Vertically Loading the Job Opening Feedback Channels 3.3
Copyright ©2011 by Cengage Learning. All rights reserved 30 Designing Organizational Processes After reading these sections, you should be able to: 4.explain the methods that companies are using to redesign international organizational processes (i.e., intraorganizational processes). 5.describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes).
Copyright ©2011 by Cengage Learning. All rights reserved 31 Intraorganizational Processes Reengineering Empowerment 4 4
Copyright ©2011 by Cengage Learning. All rights reserved 32 Reengineering The fundamental rethinking and radical redesign of business processes Intended to achieve dramatic improvements in performance Change the orientation from vertical to horizontal Change task interdependence 4.1
Copyright ©2011 by Cengage Learning. All rights reserved 33 Reengineering and Task Interdependence 4.1
Copyright ©2011 by Cengage Learning. All rights reserved 34 Empowerment A feeling of intrinsic motivation Workers perceive meaning in their work Employees are capable of self-determination Empowering Workers Permanently passing decision-making authority and responsibilities from managers to workers by giving them the information and resources they need to make good decisions 4.2
Copyright ©2011 by Cengage Learning. All rights reserved 35 Behavioral InformalityBehavioral Formality Behavioral Informality Spontaneity Casualness Interpersonal familiarity Routine & regimen Specific behavior rules Impersonal detachment Beyond the Book
Copyright ©2011 by Cengage Learning. All rights reserved 36 Behavioral Informality Popular ways to increase behavioral informality Casual Dress and Open Offices Beyond the Book
Copyright ©2011 by Cengage Learning. All rights reserved 37 Interorganizational Processes Modular Organizations Modular Organizations Virtual Organizations 5 5
Copyright ©2011 by Cengage Learning. All rights reserved 38 Modular Organizations 5.1
Copyright ©2011 by Cengage Learning. All rights reserved 39 Modular Organizations AdvantagesDisadvantages can cost less to run than traditional organizations lets organizations focus on core competencies loss of control from outsourcing may reduce their competitive advantage 5.1
Copyright ©2011 by Cengage Learning. All rights reserved 40 Virtual Organizations 5.2
Copyright ©2011 by Cengage Learning. All rights reserved 41 Virtual Organizations AdvantagesDisadvantages let companies share costs fast and flexible being the best should provide better products difficult to control the quality of partners requires tremendous management skills 5.2
Copyright ©2011 by Cengage Learning. All rights reserved 42 Beyond the Book Netflix Utilizing Virtual Teams In an effort to improve the video recommendations on its website, Netflix awarded a $1 million prize to an outside group of designers with members from New Jersey, Quebec, Austria, and Israel. More than 40,000 teams representing 186 countries participated in the competition. Many of the participants posted their results online and teams frequently worked together. A big reason for the project’s success: Netflix was able to present it as a discrete math problem with well defined parameters and objectives. Source: M. V. Copeland, “Tapping Tech’s beautiful Minds”, Fortune, 12 October