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Management ch 10 designning adaptive organizations

Chapter 10

Designing Adaptive Organizations


Organizing
 Organization

is the deployment of resources to
achieve strategic goals.

 It




is reflected in
Division of labor into specific departments & jobs
Formal lines of authority
Mechanisms for coordinating diverse organizational
tasks

Manager’s Challenge: Nissan

2

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Designing Adaptive
Organizations

Topics
Chapter 10

 Organizing

Principles and Concepts

 Organizing

the Vertical Structure

 Using

Mechanisms for Horizontal
Coordination

 Tailoring

Various Elements of Structural
Design to Organizational Situations

3

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Organization Structure
Defines how tasks are divided, resources
are deployed, and departments are
coordinated


●Set of formal tasks assigned
●Formal reporting relationships
• The design of systems to ensure
effective coordination of employees
across department
4

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The Organization Chart
Visual representation
Set of formal tasks

“The Home Depot is the world's largest home
improvement retailer currently operating 1,363
stores.

Framework for vertical control
Formal reporting relationships

5

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Work Specialization
Division of labor concept

 Tasks

are subdivided into individual jobs
 Employees perform only the tasks relevant
to their specialized function
 Jobs tend to be small, but they can be
performed efficiently

6

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Chain of Command

Unbroken
Unbroken line
line of
of authority
authority that
that links
links all
all

persons
persons in
in an
an organization
organization

Shows
Shows who
who reports
reports to
to whom
whom


Associated
Associated with
with two
two underlying
underlying principles
principles

Unity
Unityof
ofCommand
Command

Scalar
ScalarPrinciple
Principle

7

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Authority
 Formal and legitimate right of a manager to make

Formal and legitimate right of a manager to make

decisions and
and issue
issue orders
orders
decisions
 Allocate resources to achieve organizationally

Allocate resources to achieve organizationally
desired outcomes
outcomes
desired
 Authority is distinguished by three characteristics

Authority is distinguished by three characteristics
 Authority is vested in organizational positions, not

Authority is vested in organizational positions, not

people
people
 Authority is accepted by subordinates

Authority is accepted by subordinates
 Authority flows down the vertical hierarchy

Authority flows down the vertical hierarchy
8

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Responsibility
Flip side of the authority coin
 The

duty to perform the task or activity an employee has been
assigned

 Managers

are assigned authority commensurate with
responsibility

9

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Accountability

10



Mechanism through which authority and responsibility
are brought into alignment



People are subject to reporting and justifying task
outcomes to those above them in the chain of
command



Can be built into the organization structure

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Delegation
●Process managers use to transfer
authority and responsibility
●Organizations encourage
managers to delegate authority to
lowest possible level
Ethical Dilemma: A Matter of Delegation

11

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Delegation
Give
thorough
instructions

Maintain
feedback

Evaluate and reward
performance

Techniques for Delegation

Delegate the
whole task

12

Ensure that
authority equals
responsibility

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Select the right
person


Line and Staff Authority
 Line Authority

= individuals in management
positions have the formal power to direct and
control immediate subordinates

 Staff Authority

= granted to staff specialists in
their area of expertise

13

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Span of Management/
Span of Control

Number
Numberof
ofemployees
employeeswho
whoreport
reportto
toaasupervisor
supervisor
–– Traditional view = seven subordinates per manager
Traditional view = seven subordinates per manager
–– Lean organizations today = 30+ subordinates

Lean organizations today = 30+ subordinates


Supervisor
SupervisorInvolvement
Involvement

must
mustbe
beclosely
closelyinvolved
involvedwith
withsubordinates,
subordinates,the
thespan
span
should
shouldbe
besmall
small
–– need little involvement with subordinates, it can be
need little involvement with subordinates, it can be
large
large
––

14

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Factors Associated With Less
Supervisor Involvement

 Work
Workisis stable
stableand
androutine
routine

 Subordinates perform similar

Subordinates perform similarwork
work tasks
tasks

 Subordinates
Subordinatesare
areconcentrated
concentratedin
in aasingle
singlelocation
location

 Subordinates
Subordinatesare
arehighly
highly trained
trained

 Rules
Rulesand
andprocedure
proceduredefining
definingtask
task activities
activities are
are available
available

 Support
Supportsystems
systemsand
andpersonnel
personnelare
areavailable
availablefor
forthe
the
manager
manager

 Little
Littletime
timeisisrequired
requiredin
innonsupervisory
nonsupervisoryactivities
activities

 Managers’
Managers’preferences
preferencesand
andstyles
stylesfavor
favoraalarge
large span
span
15

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Tall versus Flat Structure

16



Span of Control used in an organization determines
whether the structure is tall or flat



Tall structure has a narrow span and more
hierarchical levels



Flat structure has a wide span, is horizontally
dispersed and fewer hierarchical levels



The trend has been toward wider spans of control

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Centralization versus Decentralization
 Greater

change and uncertainty in the environment
are usually associated with decentralization

 The

amount of centralization or decentralization
should fit the firm’s strategy
 In times of crisis or risk of company failure, authority
may be centralized at the top

17

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Departmentalization

The basis on which individuals are grouped into departments

18



Vertical functional approach. People are grouped
together in departments by common skills.



Divisional approach. Grouped together based on a
common product, program, or geographical region.



Horizontal matrix approach. Functional and divisional
chains of command. Some employees report to two
bosses



Team-based approach. Created to accomplish
specific tasks

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Departmentalization

The basis on which individuals are grouped into departments

19



Network approach. Small, central hub
electronically connected to their other
organizations that perform vital functions.
Departments are independent, and can be
located anywhere.



Virtual approach. Brings people together
temporarily to exploit specific opportunities
then disbands

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Five Approaches to Structural Design

20

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Five Approaches to Structural Design
Slide 2

21

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Vertical Functional Approach
 Grouping

of positions into departments
based on similar skills, expertise, and
resource use





22

Information flows up and down
Chain of command converges at the top
Managers and employees are compatible
because of similar training and expertise
Rules and procedures governing duties and
responsibilities

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Divisional Structure Advantages
 Efficient
 Skill
 Top

use of resources

specialization development
management control

 Excellent
 Quality

23

coordination

technical problem solving

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Divisional Structure Disadvantages
 Poor

communications

 Slow

response to external changes

 Decisions
 Pin

pointing responsibility is difficult

 Limited

24

concentrated at top

view of organizational goals by employees

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Horizontal Matrix Advantages
 More

efficient use of resources than single hierarchy

 Adaptable

to changing environment

 Development

of both general and specialists
management skills

 Expertise

available to all divisions
 Enlarged tasks for employees

25

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