Management, by Williams South-Western College Publishing Copyright © 2003 Chapter 11 Designing Adaptive Organizations

Management, by Williams South-Western College Publishing Copyright © What Would You Do? Reengineering at Exide Technologies 4Financial losses are increasing  Company share price is dropping  Company’s debt load is soaring 4Is currently organized geographically  company managers in each country who compete with other divisions 4What organization scheme should it use to solve these problems?

Management, by Williams South-Western College Publishing Copyright © After discussing this section, you should be able to: Learning Objectives Designing Organizational Structure 1.describe the departmentalization approach to organizational structure. 2.explain organizational authority. 3.discuss the different methods for job design.

Management, by Williams South-Western College Publishing Copyright © Methods of Departmentalization Functional Product Customer Geographic Matrix

Management, by Williams South-Western College Publishing Copyright © Functional Departmentalization Advertising Agency Sales Accounting Information Systems Human Resources Print Advertising Art Department Radio Advertising Creative Department Adapted from Exhibit 11.3

Management, by Williams South-Western College Publishing Copyright © Functional Departmentalization (cont’d) Advantages 4Creates highly skilled specialists 4Lowers costs through reduced duplication 4Communication and coordination problems are lessened Disadvantages 4Cross-department coordination can be difficult 4May lead to slower decision making 4Produces managers with narrow experiences

Management, by Williams South-Western College Publishing Copyright © Product Departmentalization General Electric Aircraft EnginesAppliances Capital ServicesLighting NBC Television Technical Products and Services Power SystemsPlastics Industrial Products & Control Systems Adapted from Exhibit 11.4

Management, by Williams South-Western College Publishing Copyright © Product Departmentalization (cont.) Advantages 4Managers specialize but have broader experiences 4Easier to assess work-unit performance 4Decision-making is faster Disadvantages 4Duplication of activities 4Difficult to coordinate across departments

Management, by Williams South-Western College Publishing Copyright © Been There, Done That 4Business was slow to develop 4Began to focus on the customer  “orbit” around their customers 4Egalitarian culture and open communication are key igus and the Solar System

Management, by Williams South-Western College Publishing Copyright © Customer Departmentalization Classic Cards Air, Car & Hotel Reservations Expense Management Solutions Advice & Planning American Express Corporation Lifestyle Cards Vacation & Last Minute Specials Small Businesses Banking Reward Cards Worldwide Travel Offices Financial Services Brokerage CardsTravel Business Services Financial Services Adapted from Exhibit 11.5

Management, by Williams South-Western College Publishing Copyright © Customer Departmentalization (cont’d) Advantages 4Focuses on customer needs 4Products and services tailored to specific customers Disadvantages 4Duplication of activities 4Difficult to coordinate across departments 4Efforts to please customers may hurt the company

Management, by Williams South-Western College Publishing Copyright © Geographic Departmentalization Coca-Cola Enterprises Central North America Group Eastern North America Group European Group Western North America Group Adapted from Exhibit 11.6

Management, by Williams South-Western College Publishing Copyright © Geographic Departmentalization (cont’d) Advantages 4Responsive to the demands of different market areas 4Unique resources located close to the customer Disadvantages 4Duplication of resources 4Difficult to coordinate across departments

Management, by Williams South-Western College Publishing Copyright © Matrix Departmentalization Pharmacia & Upjohn Headquarters Central Nervous System Thrombosis Metabolic Diseases Infectious Diseases Women’s Health Inflamatory Diseases United States Research Marketing ManufacturingEurope Research Marketing ManufacturingJapan Research Marketing Manufacturing United States Urology Research Marketing Manufacturing Europe Critical Care Research Marketing Manufacturing Adapted from Exhibit 11.7

Management, by Williams South-Western College Publishing Copyright © Matrix Departmentalization (cont’d) Advantages 4Efficiently manage large, complex tasks 4Effectively complete large, complex tasks Disadvantages 4Requires high levels of coordination 4Conflict between bosses 4Requires high levels of management skills

Management, by Williams South-Western College Publishing Copyright © Organizational Authority Chain of Command Line Versus Staff Authority Delegation of Authority Degree of Centralization

Management, by Williams South-Western College Publishing Copyright © Chain of Command 4The vertical line of authority in an organization 4Clarifies who reports to whom 4Unity of command  workers report to only one boss  “violated” by the matrix structure

Management, by Williams South-Western College Publishing Copyright © Line v. Staff Authority 4Line authority - function  the right to command immediate subordinates in the chain of command  an activity that contributes directly to profit generation 4Staff authority - function  the right to advise but not command others  an activity that supports profit generation

Management, by Williams South-Western College Publishing Copyright © Delegation of Authority 4The assignment of direct authority and responsibility to a subordinate Manager Subordinate Responsibility Authority Accountability Adapted from Exhibit 11.8

Management, by Williams South-Western College Publishing Copyright © Degree of Centralization 4Centralization of authority  primary authority is held by upper management 4Decentralization  significant authority is found in lower levels of the organization 4Standardization  solving problems by applying rules, procedures, and processes

Management, by Williams South-Western College Publishing Copyright © Job Design Job Specialization Job Rotation, Enlargement, & Enrichment Job Characteristics Model

Management, by Williams South-Western College Publishing Copyright © Job Specialization 4Breaking jobs into small tasks 4Jobs are simple, easy to learn, and economical 4Can lead to boredom, low satisfaction, high absenteeism, and employee turnover

Management, by Williams South-Western College Publishing Copyright © Blast From The Past From Farms to Factories to Telecommuting 4Early work was farm based or in “cottage industries” 4Industrial revolution led to factories and mobility 4Technology allows people to again “work” at home

Management, by Williams South-Western College Publishing Copyright © Job Rotation, Enlargement, & Enrichment 4Job Rotation  periodically moving workers from one specialized job to another 4Job Enlargement  increasing the number of tasks performed by a worker 4Job Enrichment  adding more tasks and authority to an employee’s job

Management, by Williams South-Western College Publishing Copyright © Job Characteristics Model (JCM) 4A job redesign approach that seeks to increase employee motivation 4Emphasizes internal motivation 4Redesign work to make it more “interesting”

Management, by Williams South-Western College Publishing Copyright © JCM (cont’d) Skill Variety Task Identity Task Significance Autonomy Feedback Experienced Meaningfulness of Work Experienced Responsibility for Outcomes of Work Knowledge of Actual Results of Work Activities High Internal Work Motivation High-quality Work Performance High Satisfaction with Work Low Absenteeism & Turnover Core Job Dimensions Critical Psychological States Personal & Work Outcomes Adapted from Exhibit 11.10

Management, by Williams South-Western College Publishing Copyright © Job Redesign Techniques Combining Tasks Natural Work Units Establishing Client Relationships Establishing Client Relationships Vertical Loading Opening Feedback Channels Opening Feedback Channels

Management, by Williams South-Western College Publishing Copyright © What Really Works? Making Jobs More Interesting & Motivating Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success66% Probability of success69% Task Significance Job Satisfaction

Management, by Williams South-Western College Publishing Copyright © What Really Works? (cont’d) Making Jobs More Interesting & Motivating Skill Variety 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success70% Probability of success73% Autonomy Job Satisfaction

Management, by Williams South-Western College Publishing Copyright © What Really Works? (cont’d) Making Jobs More Interesting & Motivating Feedback 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success70% Probability of success84% High Growth Need Strength Job Satisfaction

Management, by Williams South-Western College Publishing Copyright © What Really Works? (cont’d) Making Jobs More Interesting & Motivating 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success69% Low Growth Need Strength Job Satisfaction

Management, by Williams South-Western College Publishing Copyright © What Really Works? (cont’d) Making Jobs More Interesting & Motivating Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success63% Probability of success68% Task Significance Workplace Absenteeism

Management, by Williams South-Western College Publishing Copyright © What Really Works? (cont’d) Making Jobs More Interesting & Motivating Skill Variety 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success72% Probability of success74% Autonomy Workplace Absenteeism

Management, by Williams South-Western College Publishing Copyright © What Really Works? (cont’d) Making Jobs More Interesting & Motivating Feedback 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success72% 84% Workplace Absenteeism

Management, by Williams South-Western College Publishing Copyright © After discussing this section, you should be able to: Learning Objectives Designing Organizational Processes 4.explain the methods that companies are using to redesign internal organizational processes (i.e., intraorganizational processes). 5.describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes).

Management, by Williams South-Western College Publishing Copyright © Intraorganizational Processes Reengineering Empowerment Behavioral Informality

Management, by Williams South-Western College Publishing Copyright © Reengineering 4The fundamental rethinking and radical redesign of business processes 4Intended to achieve dramatic improvements in performance 4Change the orientation from vertical to horizontal 4Changes task interdependence

Management, by Williams South-Western College Publishing Copyright © Pooled Interdependence

Management, by Williams South-Western College Publishing Copyright © Sequential Interdependence

Management, by Williams South-Western College Publishing Copyright © Reciprocal Interdependence

Management, by Williams South-Western College Publishing Copyright © Empowerment 4A feeling of intrinsic motivation 4Workers perceive meaning in their work 4Employees are capable of self- determination 4Employees are active rather than passive

Management, by Williams South-Western College Publishing Copyright © Behavioral Informality 4Spontaneity 4Casualness 4Interpersonal familiarity Behavioral Formality 4Routine & regimen 4Specific rules 4Impersonal attachment

Management, by Williams South-Western College Publishing Copyright © Interorganizational Processes ModularOrganizations VirtualOrganizations BoundarylessOrganizations

Management, by Williams South-Western College Publishing Copyright © What Really Happened? Reengineering at Exide Technologies 4Implemented product structure around global business units 4Problems associated with product basis caused a return to geography structure 4Exide is still searching for the proper organizational structure