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Designing Designing Adaptive Adaptive
OrganizationOrganizationBusiness Management
Unit 2
Organizational Structure
Designing Organizational Structures
0After 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
Departmentalization
Functional Departmentalization
Functional Departmentalization
Advantages Disadvantages
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
Product Departmentalization United TechnologiesUnited Technologies
CarrierCarrier
Hamilton Sundstrand
Hamilton Sundstrand
ChubbChubb
OtisOtis
Pratt & WhitneyPratt & Whitney
UTC PowerUTC Power--Administrative services--Communication & public relations--Customer service & support--E-Business--Engineering--etc…
SikorskySikorsky
Product Departmentalization
Advantages Disadvantages
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
Customer Departmentalization
U.S. Businesses
U.S. Businesses
LocalServiceLocal
ServiceSupply ChainIntegration
Supply ChainIntegration
Local ServiceLocal
Service
SprintCorporation
SprintCorporation
InternationalBusinesses
InternationalBusinesses
Long-DistanceService
Long-DistanceService
LogisticsNetwork
LogisticsNetwork
Long-DistanceService
Long-DistanceService
SolutionsSolutions WirelessServices
WirelessServices
DistributionCenters
DistributionCenters
Wireline &WirelessServices
Wireline &WirelessServices
BusinessSolutions
BusinessSolutions
ConsumerSolutions
ConsumerSolutions
SprintNorth Supply
SprintNorth Supply
Local TelecomDivision
Local TelecomDivision
(Partial Listing)
Customer Departmentalization
Advantages Disadvantages
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
Geographic DepartmentalizationCo
ca-C
ola
Ente
rpri
ses
Ter
rito
ries
of O
per
atio
n
Geographic Departmentalization
Advantages Disadvantages
Responsive to the demands of different market areas
Unique resources located close to the customer
Duplication of resources
Difficult to coordinate across departments
Matrix Departmentalization
Adapted from Exhibit 9.7
CitiGroup InternationalCitiGroup International
North North AmericaAmerica
(excluding(excludingMexico)Mexico)
North North AmericaAmerica
(excluding(excludingMexico)Mexico)
Europe,Europe,Middle East,Middle East,
AfricaAfrica
Europe,Europe,Middle East,Middle East,
AfricaAfricaAsia PacificAsia PacificAsia PacificAsia Pacific
Global Corporate &Investment Bank
Global Corporate &Investment Bank
Global InvestmentManagement
Global InvestmentManagement
Global Consumer
Global Consumer
Smith BarneySmith Barney
Country Managers inSpain, UAE, Kenya, etc.
Country Managers inSpain, UAE, Kenya, etc.
Country Managers inChina, Australia, etc.
Country Managers inChina, Australia, etc.
Matrix Departmentalization
Advantages Disadvantages
Efficiently manage large, complex tasks
Pool of available resources
Requires high levels of coordination
Conflict between bosses
Requires high levels of management skills
Organizational Authority
Chain of Command
0The vertical line of authority in an organization0Clarifies who reports to whom0Unity of command
0 Workers report to only one boss0 Matrix organization violate this principle
Line versus Staff Authority
0Line authority0 The right to command immediate subordinates in the
chain of command
0Staff authority0 The right to advise but not command others
Delegation of Authority
Delegation of Authority
How to be a More Effective Delegator
1. Trust your staff to be a good job2. Avoid seeing perfection3. Give effective job instructions4. Know your true interests5. Follow up on progress6. Praise the efforts of your staff7. Don’t wait to the last minute to delegate8. Ask questions, expect answer, assist employees9. Provide the resources you would provide if doing the
assignment yourself10. Delegate to the lowest possible level
Degree of Centralization
0Centralization of authority0 Primary authority is held by upper management
0Decentralization0 Significant authority is found in lower levels of the
organization
0Standardization0 Solving problems by applying rules, procedures, and
processes
Designing Organizational Processes
0You should be able to: 0 Explain the methods that companies are using to
redesign international organizational processes (i.e., intra-organizational processes)
0 Describe the methods that companies are using to redesign external organizational processes ( i.e., inter-organizational processes)
Intra-Organizational Processes
ReengineeringReengineering EmpowermentEmpowerment BehavioralInformality
BehavioralInformality
Reengineering
0The fundamental rethinking and radical resign of business processes
0 Intended to achieve dramatic improvements in performance
0Change the orientation from vertical to horizontal 0Changes task interdependence
Reengineering and Task Interdependence
Empowerment
Empowering Worker
Permanently passing decision making authority and responsibility from managers to workers by giving them the information and resources they need to make good decisions
0A feeling of intrinsic motivation0Workers perceive meaning in their work0Employees are capable of self-determination
Behavioral Informality
Behavioral Informality Behavioral Formality
0Spontaneity0Casualness0Interpersonal familiarity
0Routine & regimen0Specific behavior rules0Impersonal detachment
Behavioral Informality
0Popular ways to increase behavioral informality
Casual Dress Open Office
Inter-organizational Processes
ModularOrganizations
ModularOrganizations
VirtualOrganizations
VirtualOrganizations
Modular Organizations
Modular Organizations
Advantages Disadvantages
Can cost less to run than traditional organization
Lets organizations focus on core competencies
Loss of control from outscoring
May reduce their competitive advantage
Virtual Organizations
Virtual Organizations
Advantages Disadvantages
Let companies share cost
Fast and flexible
Being the best should provide best service
Difficult to control the quality of partners
Requires tremendous management skills