1. Effective Management, by Williams South-Western College Publishing Copyright © 2002 Chapter 10 Designing Adaptive Organizations

2. Effective Management, by Williams South-Western College Publishing Copyright © 2002 2 What Would You Do? Reengineering at American Express 4Many recent “missteps” at American Express 4How should the company be organized? 4Who should make decisions?

3. Effective Management, by Williams South-Western College Publishing Copyright © 2002 3 After discussing this section, you should be able to: Learning Objectives Designing Organizational Structure ¬describe the departmentalization approach to organizational structure. ­explain organizational authority. ®discuss the different methods for job design.

4. Effective Management, by Williams South-Western College Publishing Copyright © 2002 4 Departmentalization Functional Product Customer Geographic Matrix

5. Effective Management, by Williams South-Western College Publishing Copyright © 2002 5 Functional Departmentalization Advertising Agency Sales Accounting Information Systems Human Resources Print Advertising Art Department Adapted from Figure 10.3

6. Effective Management, by Williams South-Western College Publishing Copyright © 2002 6 Functional (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

7. Effective Management, by Williams South-Western College Publishing Copyright © 2002 7 Product Departmentalization General Electric Aircraft Engines Capital Services Appliances Lighting NBC TelevisionMedical Systems Adapted from Figure 10.4

8. Effective Management, by Williams South-Western College Publishing Copyright © 2002 8 Product (cont’d) 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

9. Effective Management, by Williams South-Western College Publishing Copyright © 2002 9 Customer Departmentalization Adapted from Figure 10.5 American Express Corporation CardsTravelShopping Business Services Financial Services

10. Effective Management, by Williams South-Western College Publishing Copyright © 2002 10 Customer (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

11. Effective Management, by Williams South-Western College Publishing Copyright © 2002 11 Geographic Departmentalization Adapted from Figure 10.6 Coca-Cola Enterprises Central North America Group Eastern North America Group European Group Western North America Group

12. Effective Management, by Williams South-Western College Publishing Copyright © 2002 12 Geographic (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

13. Effective Management, by Williams South-Western College Publishing Copyright © 2002 13 Matrix Departmentalization Adapted from Figure 10.7 Pharmacia & Upjohn Headquarters Thrombosis Women’s Health Opthamology Metabolic Diseases Critical Care Urology United States Research Marketing ManufacturingEurope Research Marketing ManufacturingJapan Research Marketing Manufacturing United States Urology Research Marketing Manufacturing Europe Critical Care Research Marketing Manufacturing

14. Effective Management, by Williams South-Western College Publishing Copyright © 2002 14 Matrix (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

15. Effective Management, by Williams South-Western College Publishing Copyright © 2002 15 Organizational Authority Chain of Command Line Versus Staff Authority Delegation of Authority Degree of Centralization

16. Effective Management, by Williams South-Western College Publishing Copyright © 2002 16 Chain of Command 4The vertical line of authority in an organization 4Clarifies who reports to whom 4Unity of command Tworkers report to only one boss T“violated” by the matrix structure

17. Effective Management, by Williams South-Western College Publishing Copyright © 2002 17 Line v. Staff Authority 4Line authority - function Tthe right to command immediate subordinates in the chain of command Tan activity that contributes directly to profit generation 4Staff authority - function Tthe right to advise but not command others Tan activity that supports profit generation

18. Effective Management, by Williams South-Western College Publishing Copyright © 2002 18 Delegation of Authority 4The assignment of direct authority and responsibility to a subordinate Manager Subordinate Responsibility Authority Accountability

19. Effective Management, by Williams South-Western College Publishing Copyright © 2002 19 Degree of Centralization 4Centralization of authority Tprimary authority is held by upper management 4Decentralization Tsignificant authority is found in lower levels of the organization 4Standardization Tsolving problems by applying rules, procedures, and processes

20. Effective Management, by Williams South-Western College Publishing Copyright © 2002 20 Job Design Job Specialization Job rotation, Enlargement, & Enrichment Job Characteristics Model

21. Effective Management, by Williams South-Western College Publishing Copyright © 2002 21 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

22. Effective Management, by Williams South-Western College Publishing Copyright © 2002 22 Job Rotation, Enlargement, & Enrichment 4Rotation Tperiodically moving workers from one specialized job to another 4Enlargement Tincreasing the number of tasks performed by a worker 4Enrichment Tadding more tasks and authority to an employee’s job

23. Effective Management, by Williams South-Western College Publishing Copyright © 2002 23 Job Characteristics Model (JCM) 4A job redesign approach that seeks to increase employee motivation 4Emphasizes internal motivation 4Redesign work to make it more “interesting”

24. Effective Management, by Williams South-Western College Publishing Copyright © 2002 24 JCM (cont’d) Core Job Dimensions Personal & Work Outcomes Critical Psychological States Skill Variety Task Identity Task Significance Autonomy Feedback ExperiencedMeaningfulness 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 Adapted From Figure 10.9

25. Effective Management, by Williams South-Western College Publishing Copyright © 2002 25 Job Redesign Techniques Combing Tasks Natural Work Units Establishing Client Relationships Establishing Client Relationships Vertical Loading Opening Feedback Channels Opening Feedback Channels

26. Effective Management, by Williams South-Western College Publishing Copyright © 2002 26 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

27. Effective Management, by Williams South-Western College Publishing Copyright © 2002 27 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

28. Effective Management, by Williams South-Western College Publishing Copyright © 2002 28 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

29. Effective Management, by Williams South-Western College Publishing Copyright © 2002 29 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

30. Effective Management, by Williams South-Western College Publishing Copyright © 2002 30 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

31. Effective Management, by Williams South-Western College Publishing Copyright © 2002 31 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

32. Effective Management, by Williams South-Western College Publishing Copyright © 2002 32 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

33. Effective Management, by Williams South-Western College Publishing Copyright © 2002 33 After discussing this section, you should be able to: Learning Objectives Designing Organizational Processes ¯explain the methods that companies are using to redesign internal organizational processes (i.e., intraorganizational processes). °describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes).

34. Effective Management, by Williams South-Western College Publishing Copyright © 2002 34 Intraorganizational Processes Reengineering Empowerment Behavioral Informality

35. Effective Management, by Williams South-Western College Publishing Copyright © 2002 35 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

36. Effective Management, by Williams South-Western College Publishing Copyright © 2002 36 Pooled Interdependence

37. Effective Management, by Williams South-Western College Publishing Copyright © 2002 37 Sequential Interdependence

38. Effective Management, by Williams South-Western College Publishing Copyright © 2002 38 Reciprocal Interdependence

39. Effective Management, by Williams South-Western College Publishing Copyright © 2002 39 Empowerment 4A feeling of intrinsic motivation 4Workers perceive meaning in their work 4Employees are capable of self- determination 4Employees are active rather than passive

40. Effective Management, by Williams South-Western College Publishing Copyright © 2002 40 Behavioral Informality 4Spontaneity 4Casualness 4Interpersonal familiarity Behavioral Formality 4Routine & regimen 4Specific rules 4Impersonal attachment

41. Effective Management, by Williams South-Western College Publishing Copyright © 2002 41 Interorganizational Process ModularOrganizations VirtualOrganizations BoundarylessOrganizations

42. Effective Management, by Williams South-Western College Publishing Copyright © 2002 42 What Really Happened? Reengineering at American Express 4Used customer departmentalization 4Decentralization, except “back offices” were centralized 4Now a modular organization