1. Designing Adaptive Organizations
Designing Adaptive Organizations
CHAPTER 10

2. Learning 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 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.

3. Learning Objectives (contd.)
Learning Objectives (contd.)
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 organization’s 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.

4. Organizing
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

5. Organization Structure
Organization Structure
Defines how tasks are divided, resources are deployed, and departments are coordinated
Set of formal tasks assigned
Formal reporting relationships
The design of systems to ensure effective coordination of employees across departments

6. The Organization Chart
The Organization Chart
Visual representation
Set of formal tasks
Framework for vertical control
Formal reporting relationships

7. Division of labor concept
Work Specialization
Division of labor concept
Degree to which
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

8. Chain 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

9. Authority
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

10. Responsibility
Flip side of the authority coin
The duty to perform the task or activity an employee has been assigned
Managers are assigned authority commensurate with responsibility

11. Accountability
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

12. Delegation
Process managers use to transfer authority and responsibility
Organizations encourage managers to delegate authority to lowest possible level

13. Line and Staff Authority
Line 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

14. Span of Management/ Span of Control
Span of Management/ Span of Control
Number of employees who report to a supervisor
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 be large

15. Factors Associated With Less Supervisor Involvement
Factors Associated With Less Supervisor Involvement
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

16. Tall versus Flat Structure
Tall 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 of control

17. Centralization versus Decentralization
Centralization 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.

18. Departmentalization The basis on which individuals are grouped into departments
Vertical functional structure. People are grouped together in departments by common skills.
Divisional structure. Grouped together based on a common product, program, or geographical region.
Matrix structure. Functional and divisional chains of command. Some employees report to two bosses.
Team-based structure. Created to accomplish specific tasks.

19. Virtual Network Structure
Virtual Network Structure
An organizational structure that disaggregates major functions to separate companies that are brokered by a small headquarters organization.

20. Five Approaches to Structural Design
Five Approaches to Structural Design
Exhibit 10.3

21. Five Approaches to Structural Design Slide 2
Five Approaches to Structural Design Slide 2
Exhibit 10.3

22. Vertical Functional Approach
Vertical Functional Approach
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

23. Divisional Structure Advantages
Divisional Structure Advantages
Efficient use of resources
Skill specialization development
Top management control
Excellent coordination
Quality technical problem solving

24. Divisional Structure Disadvantages
Divisional 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

25. 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 32

26. Dual Authority Structure in a Matrix Organization
Dual Authority Structure in a Matrix Organization
Exhibit 10.6

27. Matrix Disadvantages Dual chain of command
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 33

28. Team Advantages Same advantages as functional structure
Team Advantages
Same advantages as functional structure
Reduced barriers among departments
Quicker response time
Better morale
Reduced administrative overhead 35

29. Team Disadvantages Dual loyalties and conflict
Team Disadvantages
Dual loyalties and conflict
Time and resources spent on meetings
Unplanned decentralization 36

30. Virtual Network Approach Advantages
Virtual Network Approach Advantages
Can draw on expertise worldwide
Work force flexibility
Reduced administrative overhead 38

31. Network Approach Disadvantages
Network Approach Disadvantages
Lack of control, weak boundaries
Greater demands on managers
Employee loyalty weakened 39

32. Task Forces, Teams, Project Management
Task 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

33. Reengineering
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

34. Factors Shaping Structure
Factors Shaping Structure
Exhibit 10.13