CH10 Designing Adaptive Organizations
Departmentalization: Approaches
1. Vertical Function Approach 2. Division Approach 3. Matrix Approach 4. Team Approach 5. Virtual Network Approach
Authority: Characteristics
1. Vested in organizational positions, not people 2. Managers have authority because of their positions 3. Flows down the vertical hierarchy (less authority down the hierarchy) 4. Accepted by subordinates (follows Acceptance Theory of Authority)
Acceptance Theory of Authority
A person has authority only if subordinates choose to accept the "superior"'s commands
Project Managers
A person who is responsible for coordinating the activities of several departments for the completion of a specific project Need excellent people skills Not a member of one of the departments being coordinated
Strategy
A plan of action or policy designed to achieve a major or overall aim; WHAT TO DO
Task Force
A temporary team or committee formed to solve a specific short-term problem involving several departments
Organizational Chart
A visual display of the organizational structure, chain of command, work specialization, and how they fit together
Chain of Command
An unbroken line of authority that links all individuals in the organization and specifies who reports to whom
Structure
Can be tall or flat
Virtual Network Approach: Advantages
Can draw on expertise worldwide Highly flexible and responsive Reduced overhead costs
Scalar Principle
Clearly defined line of authority in the organization that includes all employees
Team Approach: Cross-Functional Teams
Consist of employees from various functional departments who are responsible to meet as a team and resolve mutual problems
Work Specialization: Disadvantage
Creates separation and hinders coordination. Workers are isolated and do only a single, boring job.
Factors that affect Centralization vs Decentralization
Decentralization: Greater change and uncertainty Centralization Times of crisis may need call for centralization Amount of centralization or decentralization should fit firm's strategy
Centralization
Decision authority is located near the top of the organization
Decentralization
Decision authority is pushed downward to lower organization levels Believed to relieve the burden on top managers Not all organizations should decentralize
Team Approach: Disadvantages
Dual loyalties and conflict Time and resources spent on meetings Unplanned decentralization
Divisional Approach: Disadvantages
Duplication of resources across divisions Less technical depth and specialization Poor coordination across divisions.
Unity of Command
Each employee is held accountable to only one superior
Vertical Functional Approach: Advantages
Efficient use of resources Economies of scale In-depth skill specialization and development Top manager direction and control
Divisional Approach: Advantages
Fast response; flexibility in an unstable environment Fosters concern for customer needs Excellent coordination across functional departments
Flat Structure
Few hierarchical levels Wide span Horizontally dispersed
Responsibility
Formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve organizationally desired outcomes
Matrix Approach: Disadvantages
Frustration and confusion from dual chain of command High conflict between two sides of the matrix Many meetings; more discussion than action
Divisional Approach
Grouping based on organizational output Divisions are created as self-contained units with separate functional departments for each division Can be product-based or region-based
Vertical Function Approach
Grouping of positions into departments based on skills, expertise, work activities, and resource use. The functional structure is a strong, vertical design. Functional departments are concerned with the organization as a whole.
Team Approach: Permanent Teams
Groups of employees who are organized in a similar way to a formal department Emphasis on horizontal communication
Virtual Network Approach: Disadvantages
Lack of control; weak boundaries Greater demands on managers Weaker employee loyalty
Tall Structure
Many hierarchical levels Narrow Span Common structural problem for organizations
Matrix Approach: Advantages
More efficient use of resources than a single hierarchy Flexibility; adaptable to a changing environment Interdisciplinary coordination; experts are available to all divisions
Team Approach
Most widespread trend in departmentalization Gives managers a way to delegate authority, push responsibility to lower levels, and be more flexible and and responsive in a complex and competitive global environment
Horizontal Coordination
Needed in times of rapid change
Vertical Functional Approach: Disadvantages
Poor communication across functional departments Slow response to external changes; lagging innovation Decisions concentrated at the top of the hierarchy, creating delay
Staff Department
Provide specialized skills in support of Line Departments
Coordination
Quality of collaboration across departments
Responsibility should equal Authority
R > A : Task is possible but difficult; reliance on persuasion and luck A > R : Tyranny
Team Approach: Advantages
Reduced barriers among departments; increased compromise Shorter response time; quicker decisions Better morale; enthusiasm from employee involvement
Organizational Structure
Set of formal tasks assigned to individuals and departments
Factors Associated with Less Supervisor Involvement
Stable and routine work by subordinates Similar work task among subordinates Subordinates are concentrated in a single location Highly trained subordinates Rules and procedures for tasks are available Support systems and personnel are available for the manager Little time is needed for nonsupervisory activity such as coordination with other departments Manager's personal preference and style favors a large span
Factors Shaping Structure
Strategy Technology
Structure Fits the Strategy
Strategy, Environment, Goals Differentiation Strategy Cost Leadership Mechanistic Organic
Work Specialization
The degree to which tasks in an organization are subdivided into separate jobs; Also known as DIVISION OF LABOR.
Organizing
The deployment of organizational resources to achieve strategic goals; follows from strategy; HOW TO DO IT
Authority
The formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve organizationally desired outcomes
Accountability
The mechanism through which authority and responsibility are aligned People with A and R are subject to report and justify task outcomes to their superiors
Delegation
The process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy
Reengineering
The radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed
Chain of Command: Underlying Principles
Unity of Command Scalar Principle
Matrix Approach
Uses both functional and divisional chains of command simultaneously, in the same part of the organization Employees can have two bosses Matrix Boss - in charge of one side of the matrix Top Leader - oversees both product and functional chains of command
Virtual Network Approach
Uses outsourcing of specialists
Coordination: Dangers
When there is poor coordination, everybody works independently
Span of Management
a.k.a. span of control Refers to the number of employees reporting to a supervisor More employees should imply less involvement with subordinates' tasks Determines flatness of structure
Line Authority
authority that entitles a manager to direct the work of an employee
Cross-Functional Teams
furthers horizontal coordination by including members across the organization
Line Department
perform tasks that reflect the organization's primary goal and mission
Departmentalization
the basis for grouping positions into departments and departments into the total organization
Staff Authority
the right to advise, recommend, and counsel in the staff specialists' area of expertise Staff specialists advise managers in technical areas
