Designing Adaptive Organizations

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

1CHAPTER 11

CHAPTER 11

Management3rd Edition

Chuck Williams

Designing Adaptive Organizations

Prepared byDeborah BakerTexas Christian University


2CHAPTER 11

What Would You Do?You are the new CEO of Microsoft…

Bill Gates is having troubleletting go of Microsoft’s control

You are a micromanager and a control freak

What can you and/or Gates do to make the CEO transition easier?What organizational structure best suits Microsoft at this point?


3CHAPTER 11

Designing Organizational Structures

After reading the next three 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.


4CHAPTER 11

Departmentalization

1

Customer Geographic Matrix

Functional Product


5CHAPTER 11

Functional Departmentalization

1.1

Advertising Agency

Sales

Accounting

InformationSystems

HumanResources

PrintAdvertisingArt Department

RadioAdvertising

Creative Department

Adapted from Exhibit 11.3


6CHAPTER 11

Advantages Disadvantages

Functional Departmentalization

1.1

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


7CHAPTER 11

Product Departmentalization

1.2

General Electric

AircraftEngines

ConsumerFinance

Consumer Products

TransportationSystems

Specialty Materials

MedicalSystems

NBCInsurance


(Partial Listing of Products)


8CHAPTER 11


Product Departmentalization

1.2

Managers specialize, but have broader experiences

Easier to assess work-unit performance

Decision-making is faster

Duplication of activities Difficult to coordinate

across departments


9CHAPTER 11

Customer Departmentalization

1.3

Classic Cards Air, Car, HotelReservations

ExpenseManagement

SolutionsAdvice &Planning

American ExpressCorporation

Lifestyle Cards

Vacation &Specials

SmallBusinessesBanking

Reward Cards WorldwideTravel Offices

FinancialServicesBrokerage

Cards Travel BusinessServices

FinancialServices

(Partial Listing)



10CHAPTER 11


Customer Departmentalization

1.3

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


11CHAPTER 11

Been There Done ThatIGUS AND THE SOLAR SYSTEM

Frank Blasé, CEO of the igus corporation…

Business was slow to develop The key to success was a

focus on customers created an organizational

structure based on the solar system the sun was the customer and the planets

were teams of igus’ workers Egalitarian culture and open communication


12CHAPTER 11

Geographic Departmentalization

1.4Adapted from Exhibit 11.6

Coca-ColaEnterprises

Central NorthAmerica Group

Eastern NorthAmerica Group

EuropeanGroup

Western NorthAmerica Group


13CHAPTER 11


Geographic Departmentalization

1.4

Responsive to the demands of different market areas

Unique resources located close to the customer

Duplication of resources Difficult to coordinate

across departments


14CHAPTER 11

Matrix Departmentalization


CitiGroup International

WesternWesternEuropeEurope

Latin Latin AmericaAmerica

Central &Central &EasternEasternEuropeEurope

Global Corporate &Investment Bank

Global InvestmentManagement

Global Consumer

Smith Barney

Country Managers in Spain, France, Ireland, etc.

Country Managers in China, Japan, etc.


15CHAPTER 11


Matrix Departmentalization

1.5

Efficiently manage large, complex tasks

Effectively carry out large, complex tasks

Requires high levels of coordination

Conflict between bosses Requires high levels of

management skills


16CHAPTER 11

Organizational Authority

2

Delegationof Authority

Degree ofCentralization

Chain ofCommand

Line versusStaff Authority


17CHAPTER 11

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


18CHAPTER 11

Line versus Staff Authority

2.2

Line authority the right to command immediate subordinates in

the chain of commandan activity that contributes directly to profit

generation Staff authority

the right to advise but not command othersan activity that supports profit generation


19CHAPTER 11

Delegation of Authority

2.3

The assignment of direct authority and responsibility to a subordinate

ManagerResponsibilityResponsibility AuthorityAuthority

AccountabilityAccountabilitySubordinate



20CHAPTER 11

How to Be a More Effective Delegator


1. Trust your staff to be a good job2. Avoid seeking perfection3. Give effective job instructions4. Know your true interests5. 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

assignment yourself.10. Delegate to the lowest possible level.


21CHAPTER 11

Degree of Centralization

2.4

Centralization of authorityprimary authority is held by upper management

Decentralizationsignificant authority is found in lower levels of

the organization Standardization

solving problems by applying rules, procedures, and processes


22CHAPTER 11

Job Design

3

SpecializedJobs

Job Rotation, Enlargement,

Enrichment

JobCharacteristics

Model


23CHAPTER 11

Job Specialization Breaking jobs into small tasks Jobs are simple, easy to learn, and economical Can lead to boredom, low satisfaction, high

absenteeism, and employee turnover

3.1


24CHAPTER 11

Job Rotation, Enlargement, & Enrichment

3.2

Job Rotationperiodically moving workers from one

specialized job to another Job Enlargement

increasing the number of tasks performed by a worker

Job Enrichmentadding more tasks and authority to an

employee’s job


25CHAPTER 11

Blast From The PastFrom Farms to Factories to

Telecommuting

3

For most of history, work occurred in homes or on farms

During industrial revolution, low-paid, unskilled workers ran machines and replaced skilled artisans mass production was born jobs occurred in large formal organizations managers and disciplinary rules were needed


26CHAPTER 11

Job Characteristics Model

3.3

A job redesign approach that seeks to increase employee motivation

Emphasizes internal motivationexperience work as meaningfulexperience responsibility for work outcomesknowledge of results


27CHAPTER 11

Job Redesign Techniques

3.3

Combining Tasks

Forming Natural Work Units

Establishing ClientRelationships

Vertically Loadingthe Job

Opening Feedback Channels



28CHAPTER 11

Job Characteristics Model

3.3

Skill Variety

Task Identity

Task Significance

Autonomy

Feedback

ExperienceMeaningfulness

of Work

ExperienceResponsibility forOutcomes of Work

Knowledge ofActual Results ofWork Activities

High InternalWork Motivation

High-qualityWork Performance

High Satisfactionwith Work

Low Absenteeism& Turnover

Core Job Dimensions

CriticalPsychological

States

Personal & Work

Outcomes



29CHAPTER 11

What Really WorksThe Job Characteristics Model

3

Task Identity10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

probability of success 66%

Task Significance10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Skill Variety10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Job Satisfaction


30CHAPTER 11

What Really Works (cont.)The Job Characteristics Model

3

Autonomy10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Provide Feedback10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Job Satisfaction


31CHAPTER 11


3

Job Satisfaction

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Low Growth Need Strength/Job Satisfaction

High Growth Need Strength/Job Satisfaction10% 20% 30% 40% 50% 60% 70% 80% 90% 100%



32CHAPTER 11


3

Task Identity10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Workplace Absenteeism

Task Significance

Skill Variety


33CHAPTER 11


3

Autonomy10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Workplace Absenteeism

Provide Feedback


34CHAPTER 11

Designing Organizational Processes

After reading the next two sections, you should be able to:

4. explain the methods that companies are usingto redesign internal organizational processes(i.e., intraorganizational processes).

5. describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes).


35CHAPTER 11

Intraorganizational Processes

4

Reengineering Empowerment BehavioralInformality


36CHAPTER 11

Reengineering

4.1

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


37CHAPTER 11

Reengineering and Task Interdependence

4.1

Pooled Interdependence

Adapted from Exhibit 11.11More


38CHAPTER 11


4.1

Sequential Interdependence

Adapted from Exhibit 11.11More


39CHAPTER 11


4.1

Reciprocal Interdependence



40CHAPTER 11

Empowerment

4.2

A feeling of intrinsic motivation Workers perceive meaning in their work Employees are capable of self-determination

EmpoweringWorkers

Permanently passing decision-makingauthority and responsibilities frommanagers to workers by giving themthe information and resources they need to make good decisions


41CHAPTER 11

Behavioral Informality Behavioral Formality

Behavioral Informality

4.3

Spontaneity Casualness Interpersonal familiarity

Routine & regimen Specific rules Impersonal attachment


42CHAPTER 11

Interorganizational Processes

5

ModularOrganizations

VirtualOrganizations

BoundarylessOrganizations


43CHAPTER 11

Modular Organizations

5.1


44CHAPTER 11

Modular Organizations

5.1


can cost less to run thantraditional organizations

lets organizations focuson core competencies

loss of control from outsourcing

may reduce their competitive advantage


45CHAPTER 11

Virtual Organizations

5.2


46CHAPTER 11

Virtual Organizations

5.2


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

http://www.agileweb.com

http://www.agileweb.com/


47CHAPTER 11

Boundaryless Organizations

5.3


48CHAPTER 11

Boundaryless Organizations

5.3


better utilize employee knowledge and skills

closer relationships with company’s external environment

transition is threatening no clear way to achieve

a boundaryless organization


49CHAPTER 11

What Would You Do—II?Exide Technologies

Exide’s financial losses are increasing, share price is dropping, and the debt load is soaring

Exide is organized geographically and competition is fierce between company managers

Which organizational structure should Exide use?

When will Exide know when it has found the right organizational structure?

What would you do?

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