Building Specification

7/21/2019 Building Specification

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Chapter 7Chapter 7

Designing AdaptiveDesigning Adaptive

OrganizationsOrganizations



Major Concerns in OrganizingMajor Concerns in Organizing Division of Labor (Differentiation)Division of Labor (Differentiation)

Coordination (Integration)Coordination (Integration)

In Reference to the Organizational ChartIn Reference to the Organizational Chart

Organizing Involves!Organizing Involves!

"#R$ICAL %$R&C$&R#"#R$ICAL %$R&C$&R#

Coordination fro' $op to otto'Coordination fro' $op to otto'ORI*O+$AL %$R&C$&R#ORI*O+$AL %$R&C$&R#

Depart'entalization (,ho -or.s together/)Depart'entalization (,ho -or.s together/)



,or. %pecialization,or. %pecialization

Degree to -hich tas.s are s0bdividedDegree to -hich tas.s are s0bdivided

into individ0al jobsinto individ0al jobs

A highl1 specialized job is narro- inA highl1 specialized job is narro- inscopescope

Increases efficienc1 0p to a pointIncreases efficienc1 0p to a point

,ith e2tre'e specialization -or.ers,ith e2tre'e specialization -or.erstend to beco'e bored and alienatedtend to beco'e bored and alienated



Chain of Co''andChain of Co''and

$he line of a0thorit1 sho-n in the$he line of a0thorit1 sho-n in the

organization chart that lin.s all personsorganization chart that lin.s all persons

and sho-s -ho reports to -ho'3and sho-s -ho reports to -ho'3

C#OC#O

"4 Mar.eting"4 Mar.eting "4 4rod0ction"4 4rod0ction "4 5inance"4 5inance



A0thorit1A0thorit1

Managers have a0thorit1 beca0se of the positionsManagers have a0thorit1 beca0se of the positions

the1 hold (not -ho the1 are)the1 hold (not -ho the1 are)

$o be effective it$o be effective it '0st be accepted'0st be acc

epted b1b1

s0bordinates3s0bordinates3

Responsibilit1Responsibilit1 D0t1 to perfor' the tas. an e'plo1ee has beenD0t1 to perfor' the tas. an e'plo1ee has been

assignedassigned

A0thorit1 sho0ld be co''ens0rate -ithA0thorit1 sho0ld be co''ens0rate -ith

responsibilit13responsibilit13



DelegationDelegation

4rocess to transfer a0thorit1 and4rocess to transfer a0thorit1 and

responsibilit1 to positions belo-responsibilit1 to positions belo-

DelegationDelegation does notdoes not red0ce responsibilit1red0ce responsibilit1 enefits both the organization and theenefits both the organization and the

individ0al e'plo1eeindivid0al e'plo1ee



Co''on 4ractice is to!Co''on 4ractice is to!

C#+$RALI*#C#+$RALI*# (a0thorit1 at top)(a0thorit1 at top)

– Acco0ntingAcco0nting

– 5inance5inance

– 0'an Reso0rces Manage'ent0'an Reso0rces Manage'ent

– Infor'ation %1ste'sInfor'ation %1ste's

D#C#+$RALI*#D#C#+$RALI*# ('0ch delegation)('0ch delegation)

– 4rod0ction4rod0ction

– Mar.etingMar.eting



%pan of Manage'ent%pan of Manage'ent

+0'ber of e'plo1ees reporting to a+0'ber of e'plo1ees reporting to a

s0pervisors0pervisor

$radition has reco''ended a span of$radition has reco''ended a span of'anage'ent of fo0r to seven'anage'ent of fo0r to seven

s0bordinatess0bordinates

,hat is best depends on the sit0ation,hat is best depends on the sit0ation



Depart'entalizationDepart'entalization

asis for gro0ping job positions into depart'ents and depart'entsasis for gro0ping job positions into depart'ents and depart'entsinto the total organization3into the total organization3

Internal Operations OrientedInternal Operations Oriented

– 50nctional50nctional

– +et-or. ("irt0al)+et-or. ("irt0al)

O0tp0t OrientedO0tp0t Oriented – DivisionalDivisional

» 4rod0ct4rod0ct

» 6eographic6eographic

» C0sto'erC0sto'er

– $ea' (Cl0ster)$ea' (Cl0ster)

Co'binationsCo'binations

– 1brid (different t1pes at1brid (different t1pes at differentdifferent places inplaces in

an org3)an org3)

– Matri2 (different t1pes at si'0ltaneo0s atMatri2 (different t1pes at si'0ltaneo0s at

thethe sa'esa'e places in an org3)places in an org3)



50nctional Approach50nctional ApproachDepart'ents based on si'ilar activities s.illsDepart'ents based on si'ilar activities s.ills

and reso0rce 0se3and reso0rce 0se3Advantages!Advantages!

#fficient 0se of#fficient 0se ofreso0rcesreso0rces

#cono'ies of %cale#cono'ies of %cale

Indepth s.illIndepth s.ill

specializationspecialization

Disadvantages!Disadvantages!

4oor co''0nication4oor co''0nication

a'ong depart'entsa'ong depart'ents

%lo- response to%lo- response to

e2ternal changese2ternal changes

Lo1alt1 'ore to f0nctionLo1alt1 'ore to f0nction

than c0sto'er or thethan c0sto'er or the

-hole organization-hole organization



Divisional ApproachDivisional Approach

Depart'ents are gro0ped together basedDepart'ents are gro0ped together based

on organizational o0tp0ts (e3g3 prod0cton organizational o0tp0ts (e3g3 prod0ct

geograph1 c0sto'er)geograph1 c0sto'er)

50nctions (e3g3 'ar.eting) are split50nctions (e3g3 'ar.eting) are split

a'ong the divisionsa'ong the divisions

Its advantages and disadvantages tend toIts advantages and disadvantages tend to

be the opposite of those of the f0nctionalbe the opposite of those of the f0nctionalapproachapproach



DivisionsDivisions

Advantages!Advantages!

80ic.er changes in80ic.er changes in

an 0nstablean 0nstable

environ'entenviron'ent

More in to0ch -ithMore in to0ch -ith

c0sto'ersc0sto'ers

Disadvantages!Disadvantages!

D0plicationD0plication

– Co'petition forCo'petition for

reso0rces a'ongreso0rces a'ong

divisionsdivisions

– More 'anagersMore 'anagers

neededneeded

Less professionalLess professional

specializationspecialization



Matri2 ApproachMatri2 Approach

50nctional and divisional chains of50nctional and divisional chains of

co''and si'0ltaneo0sl1co''and si'0ltaneo0sl1

"iolates the 0nit1 of co''and concept3"iolates the 0nit1 of co''and concept3



Matri2 %tr0ct0re ,h1/Matri2 %tr0ct0re ,h1/

$o get the advantages of both 50nctional$o get the advantages of both 50nctional

and Divisional %tr0ct0resand Divisional %tr0ct0res

%ophisticated technolog1 fastchanging%ophisticated technolog1 fastchangingenviron'entenviron'ent

Diverse Diverse prod0ctsprod0cts andand geographicalgeographical areasareas



Disadvantages of Matri2Disadvantages of Matri2

Man1 'eetings to coordinate activitiesMan1 'eetings to coordinate activities

igh conflict bet-een t-o sides of 'atri2igh conflict bet-een t-o sides of 'atri2

+eed for e2tensive h0'an relations+eed for e2tensive h0'an relationstrainingtraining



$ea' Approach$ea' Approach

Cross-functional teamsCross-functional teams (Cl0sters)(Cl0sters) consistconsist

of e'plo1ees fro' vario0s f0nctionalof e'plo1ees fro' vario0s f0nctional

depart'entsdepart'ents

$ea's t1picall1 have 'ore decision$ea's t1picall1 have 'ore decision

'a.ing po-er than previo0sl1 held b1'a.ing po-er than previo0sl1 held b1

-or.ers at their levels3-or.ers at their levels3



$ea' Approach$ea' Approach

AdvantagesAdvantages

– 80ic.er response ti'e80ic.er response ti'e

–

etter 'oraleetter 'orale – Red0ced ad'inistrative overheadRed0ced ad'inistrative overhead

DisadvantagesDisadvantages

–

ConflictConflict – $i'e and reso0rces spent on 'eetings$i'e and reso0rces spent on 'eetings



+et-or. ("irt0al) Approach+et-or. ("irt0al) Approach

Organization divides 'ajor f0nctionsOrganization divides 'ajor f0nctions

a'ong separate co'panies bro.ered b1a'ong separate co'panies bro.ered b1

a s'all head90arters organizationa s'all head90arters organization

%o'e-hat li.e a%o'e-hat li.e a f0nctionalf0nctional organization3organization3



+et-or. Approach+et-or. Approach

AdvantagesAdvantages – Increases co'petitiveness especiall1 ofIncreases co'petitiveness especiall1 of

s'all fir'ss'all fir's

– 5le2ibilit15le2ibilit1

– Red0ced CostsRed0ced Costs

DisadvantagesDisadvantages

– +o handson control+o handson control – Lo1alt1 -ea.ened3Lo1alt1 -ea.ened3



Mechanistic vs3 OrganicMechanistic vs3 Organic

OrganizationsOrganizations

"ertical vs3 orizontal %tr0ct0ral Do'inance"ertical vs3 orizontal %tr0ct0ral Do'inance

Rigid vs3 5le2ibleRigid vs3 5le2ible

%pecialized :obs vs3 &nspecialized%pecialized :obs vs3 &nspecialized oss Control vs3 %elfControloss Control vs3 %elfControl

Centralized Decisions vs3 DecentralizedCentralized Decisions vs3 Decentralized

0rea0cratic vs3 +onb0rea0cratic0rea0cratic vs3 +onb0rea0cratic



Depart'entalization $1pesDepart'entalization $1pes

(5ro' 'ost Mechanistic to 'ost Organic)(5ro' 'ost Mechanistic to 'ost Organic)

50nctional50nctional

50nctional -ith integrators cross50nctional -ith integrators crossf0nctional co''ittees etc3f0nctional co''ittees etc3

Matri2Matri2

DivisionalDivisional $ea'$ea'



,hen the Mechanistic ("ertical),hen the Mechanistic ("ertical)

Approach is 'ost Appropriate!Approach is 'ost Appropriate!

#2ternal #nviron'ent#2ternal #nviron'ent is! %tableis! %table

6ro-th and Innovation 6oals6ro-th and Innovation 6oals are!are!

5e- or +one2istent (Internal %tabilit1)5e- or +one2istent (Internal %tabilit1)$he Organization;s$he Organization;s %ize%ize is! Largeis! Large

$he$he $echnolog1$echnolog1 is! Mass 4rod0ction (oris! Mass 4rod0ction (or

involving lo-level s.ills)involving lo-level s.ills)

,h h O i A h i



,hen the OrganicApproach is,hen the OrganicApproach is

'ost Appropriate!'ost Appropriate!

#2ternal #nviron'ent#2ternal #nviron'ent is! &nstableis! &nstable6ro-th and Innovation 6oals6ro-th and Innovation 6oals are! +0'ero0sare! +0'ero0s

$echnolog1$echnolog1 is!is!

%'all atch%'all atchContin0o0s 4rocessContin0o0s 4rocess

5le2ible Man0fact0ring (Co'p0ter Assisted)5le2ible Man0fact0ring (Co'p0ter Assisted)

%ervice especiall1 professional service jobs3%ervice especiall1 professional service jobs3



%ervice $echnolog1%ervice $echnolog1

$ends to be 'ore Organic (orizontal)$ends to be 'ore Organic (orizontal)

than 'an0fact0ringthan 'an0fact0ring

#'plo1ees have direct contact -ith#'plo1ees have direct contact -ithc0sto'ersc0sto'ers

O0tp0t of the fir' is intangibleO0tp0t of the fir' is intangible

4rod0ction and cons0'ption are4rod0ction and cons0'ption aresi'0ltaneo0ssi'0ltaneo0s

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