CH10 Designing Adaptive Organizations

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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


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