1. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 1 Chapter 9 Prepared by Deborah Baker Texas Christian University Management 4th Edition Chuck Williams Designing Adaptive Organizations

2. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 2 What Would You Do?  Where do you start to fix a company that has a $100 million loss, falling ad sales, plummeting stock prices, and an unmanageable organizational structure?  Yahoo has done a poor job in establishing relationships with customers Yahoo Headquarters, Sunnyvale, California What structure should Yahoo adopt? What should you do about the informal culture? How can better decisions be made for the company?

3. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 3 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.

4. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 4 Organizational Structure Exhibit 9.2 Process View of Microsoft’s Organization

5. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 5 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.

6. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 6 Departmentalization Customer Geographic Matrix Functional Product 1 1

7. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 7 Functional Departmentalization 1.1

8. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 8 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

9. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 9 Product Departmentalization 1.2 United Technologies Carrier Hamilton Sundstrand Chubb Otis Pratt & Whitney UTC Power Adapted from Exhibit 9.4 --Administrative services --Communication & public relations --Customer service & support --E-Business --Engineering --etc… Sikorsky

10. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 10 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

11. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 11 Customer Departmentalization U.S. Businesses Local Service Supply Chain Integration Supply Chain Integration Local Service Sprint Corporation International Businesses Long- Distance Service Logistics Network Long- Distance Service Solutions Wireless Services Distribution Centers Wireline & Wireless Services Business Solutions Consumer Solutions Sprint North Supply Local Telecom Division (Partial Listing) Adapted from Exhibit 9.5 1.3

12. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 12 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

13. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 13 Geographic Departmentalization Exhibit 9.6 Coca-Cola Enterprises Territories of Operation 1.4

14. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson 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

15. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 15 Matrix Departmentalization Adapted from Exhibit 9.7 CitiGroup International North America (excluding Mexico) North America (excluding Mexico) Europe, Middle East, Africa Africa Asia Pacific Global Corporate & Investment Bank Global Corporate & Investment Bank Global Investment Management Global Consumer Smith Barney CountryManagers inSpain, UAE,Kenya, etc. CountryManagers inChina, Australia,etc. 1.5

16. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson 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

17. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson 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

18. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 18 Chain of Command  The vertical line of authority in an organization  Clarifies who reports to whom  Unity of command  workers report to only one boss  matrix organizations violate this principle 2.1

19. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson 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

20. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 20 Delegation of Authority 2.3 Delegation of Authority The assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible.

21. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 21 Delegation of Authority Adapted from Exhibit 9.8 2.3

22. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 22 How to be a More Effective Delegator 1. Trust your staff to be a good job 2. Avoid seeing 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 provide if doing the assignment yourself. 10. Delegate to the lowest possible level. Adapted from Exhibit 9.9 2.3

23. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson 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

24. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 24 Job Design Specialized Jobs Job Rotation, Enlargement, Enrichment Job Characteristics Model 3 3

25. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson 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, and economical  Can lead to low satisfaction, high absenteeism, & employee turnover 3.1

26. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson 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

27. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson 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

28. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 28 Job Characteristics Model Exhibit 9.10 3.3

29. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 29 What Really Works The Job Characteristics Model Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success66% Task Significance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success69% Skill Variety 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success70% Job Satisfaction 3.3

30. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 30 Autonomy 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success73% Provide Feedback 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success70% Job Satisfaction 3.3 What Really Works The Job Characteristics Model

31. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 31 Job Satisfaction 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success69% Low Growth Need Strength/Job Satisfaction High Growth Need Strength/Job Satisfaction 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success84% 3.3 What Really Works The Job Characteristics Model

32. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 32 Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success63% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success68% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success72% Workplace Absenteeism Task Significance Skill Variety 3.3 What Really Works The Job Characteristics Model

33. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 33 Autonomy 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success74% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success72% Workplace Absenteeism Provide Feedback 3.3 What Really Works The Job Characteristics Model

34. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 34 Job Redesign Techniques Redesigning Jobs Combining Tasks Forming Natural Work Units Establishing Client Relationships Vertically Loading the Job Opening Feedback Channels Adapted from Exhibit 9.10 3.3

35. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 35 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).

36. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 36 Intraorganizational Processes Reengineering Empowerment Behavioral Informality 4 4

37. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 37 Reengineering  The fundamental rethinking and radical redesign of business processes  Intended to achieve dramatic improvements in performance  Change the orientation from vertical to horizontal  Changes task interdependence 4.1

38. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 38 Reengineering and Task Interdependence Exhibit 9.11 4.1

39. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 39 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

40. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 40 Behavioral InformalityBehavioral Formality Behavioral Informality  Spontaneity  Casualness  Interpersonal familiarity  Routine & regimen  Specific behavior rules  Impersonal detachment 4.3

41. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 41 Behavioral Informality Popular ways to increase behavioral informality Casual Dress and Open Offices

42. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 42 Do the Right Thing 4.3 Don’t Scavenge That Office If Somebody Is Still in It  It’s roadkill in the animal kingdom: coworkers scavenge for office leftovers… often before an employee leaves  Do the right thing by maintaining the dignity of departing coworkers: wait until the office is empty Don’t Scavenge That Office If Somebody Is Still in It  It’s roadkill in the animal kingdom: coworkers scavenge for office leftovers… often before an employee leaves  Do the right thing by maintaining the dignity of departing coworkers: wait until the office is empty

43. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 43 Interorganizational Processes Modular Organizations Modular Organizations Virtual Organizations 5 5

44. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 44 Modular Organizations 5.1 Exhibit 9.13

45. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 45 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

46. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 46 Virtual Organizations 5.2 Exhibit 9.14

47. Chapter 9 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 47 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 http://www.agileweb.com Web Link