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

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Ente

rpri

ses

Ter

rito

ries

of O

per

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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