Chapter 9 Designing Adaptive Organizations © 2015 Cengage Learning MGMT7

Chapter 9Designing Adaptive

Organizations

© 2015 Cengage Learning MGMT7

© 2015 Cengage Learning

9-1 describe the departmentalization approach to organizational structure

9-2 explain organizational authority9-3 discuss the different methods for job design9-4 explain the methods that companies are using to

redesign internal organizational processes (i.e., intraorganizational processes)

9-5 describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes).

Structure and Process

• Organizational structure

• Organizational process

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Thomson Reuters

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Process View of Microsoft’s Organization

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Departmentalization

• Functional

• Product

• Customer

• Geographic

• Matrix © 2015 Cengage Learning 9-1

Functional Departmentalization

• Advantages– allows work done by highly qualified

specialists– lowers costs by reducing duplication– makes communication and coordination

easier

• Disadvantages– cross-department coordination can be

difficult– may lead to slower decision making

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Functional Departmentalization

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Product Departmentalization

• Advantages– allows people to specialize in one area

of expertise – makes it easier to assess performance– makes decision making faster

• Disadvantages– duplication – coordination across different product

departments

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Product Departmentalization: UTC

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Customer Departmentalization

• Advantages– focuses organization on customer needs– allows companies to specialize products

and services to customer needs

• Disadvantages– duplication of resources– workers might please customers but

hurt business

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Customer Departmentalization: Swisscom AG

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Geographic Departmentalization

• Advantages– helps companies respond to different

markets– reduces costs by locating unique

resources closer to customers

• Disadvantages– duplication of resources– difficult to coordinate departments

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Geographic Departmentalization: AB InBev Company

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Matrix Departmentalization

• Advantages– allows companies to efficiently manage

large, complex tasks– gives much more diverse set of expertise

and experience

• Disadvantages– requires a high level of duplication– confusion and conflict between project

bosses– requires much more management skill

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Matrix Departmentalization: Procter & Gamble

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Chain of Command

• Chain of command

• Unity of command

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Authority

• Line authority• Staff authority

• Line function • Staff function

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Delegation

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Degree of Centralization

• Centralization of authority

• Decentralization

• Standardization

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Advantages of Decentralization

• Develops employee capabilities

• Faster decision making

• More satisfied employees and customers

• Better employee performance

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Job Specialization

• Job comprises a smaller part of a larger task

• Easy to learn

• Low variety

• High repetition

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Job Rotation, Enlargement, Enrichment

• Rotation

• Enlargement

• Enrichment

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Job Characteristics Model

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Internal Motivation

• Experience work as meaningful

• Experience responsibility for work outcomes

• Knowledge of results

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Core Job Characteristics

• Skill variety

• Task identity

• Task significance

• Autonomy

• Feedback© 2015 Cengage Learning 9-3

To Increase Internal Motivation

• Combine tasks

• Natural work units

• Establish client relationships

• Vertical loading

• Open feedback channels© 2015 Cengage Learning9-3

Intraorganizational Processes

The collection of activities that take place within an organization to

transform inputs into outputs that customers value.

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Reengineering

“the fundamental rethinking and radical redesign of business

processes to achieve dramatic improvements in critical,

contemporary measures of performance, such as cost, quality, service and speed.”

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Reengineering and Task Interdependence

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Empowerment

• Empowering workers

• Empowerment

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Interorganizational Processes

A collection of activities that occur among companies to transform inputs

into outputs that customers value.

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Modular Organization

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Modular Organizations

• Advantages– reduced costs

• Disadvantages– loss of control– noncore activities that are outsourced

may become source of advantage– suppliers to whom work is outsourced

can become competitors

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Virtual Organizations

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Virtual Organizations

• Advantages– shared costs– fast and flexible

• Disadvantages– difficult to control quality of work done

by partners– requires tremendous managerial skills

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Modern Shed

1. Describe how Modern Shed functions as a modular organization.

2. What are the advantages and disadvantages of Modern Shed’s organizational structure?

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