Chapter 11

1. Chapter 11 Designing Adaptive Organizations

2. What Would You Do?Reengineering at Exide Technologies • Financial losses are increasing • Company share price is dropping • Company’s debt load is soaring • Is currently organized geographically • company managers in each country who compete with other divisions • What organization scheme should it use to solve these problems?

3. Learning ObjectivesDesigning Organizational Structure • describe the departmentalization approach to organizational structure. • explain organizational authority. • discuss the different methods for job design. After discussing this section, you should be able to:

4. 5 Methods of Departmentalization Functional Product Customer Geographic Matrix

5. Functional Departmentalization Advertising Agency Sales Information Systems Accounting Human Resources Art Department Print Advertising Creative Department Radio Advertising Adapted from Exhibit 11.3

6. Advantages Creates highly skilled specialists Lowers costs through reduced duplication Communication and coordination problems are lessened Disadvantages Cross-department coordination can be difficult May lead to slower decision making Produces managers with narrow experiences Functional Departmentalization (cont’d)

7. General Electric Aircraft Engines Appliances Capital Services Lighting Technical Products and Services NBC Television Plastics Power Systems Industrial Products & Control Systems Product Departmentalization Adapted from Exhibit 11.4

8. Advantages Managers specialize but have broader experiences Easier to assess work-unit performance Decision-making is faster Disadvantages Duplication of activities Difficult to coordinate across departments Product Departmentalization (cont.)

9. Been There, Done That igus and the Solar System • Business was slow to develop • Began to focus on the customer • “orbit” around their customers • Egalitarian culture and open communication are key

10. Customer Departmentalization American Express Corporation Cards Travel Business Services Financial Services Classic Cards Air, Car & Hotel Reservations Expense Management Solutions Advice & Planning Lifestyle Cards Vacation & Last Minute Specials Small Businesses Banking Reward Cards Worldwide Travel Offices Financial Services Brokerage Adapted from Exhibit 11.5

11. Advantages Focuses on customer needs Products and services tailored to specific customers Disadvantages Duplication of activities Difficult to coordinate across departments Efforts to please customers may hurt the company Customer Departmentalization (cont’d)

12. Geographic Departmentalization Coca-Cola Enterprises Central North America Group European Group Western North America Group Eastern North America Group Adapted from Exhibit 11.6

13. Advantages Responsive to the demands of different market areas Unique resources located close to the customer Disadvantages Duplication of resources Difficult to coordinate across departments Geographic Departmentalization (cont’d)

14. Matrix Departmentalization Pharmacia & Upjohn Headquarters • United States • Research • Marketing • Manufacturing • Europe • Research • Marketing • Manufacturing • Japan • Research • Marketing • Manufacturing Central Nervous System • Europe • Critical Care • Research • Marketing • Manufacturing Infectious Diseases Thrombosis • United States • Urology • Research • Marketing • Manufacturing Metabolic Diseases Women’s Health Inflamatory Diseases Adapted from Exhibit 11.7

15. Advantages Efficiently manage large, complex tasks Effectively complete large, complex tasks Disadvantages Requires high levels of coordination Conflict between bosses Requires high levels of management skills Matrix Departmentalization (cont’d)

16. Organizational Authority Chain of Command Line Versus Staff Authority Delegation of Authority Degree of Centralization

17. 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 • “violated” by the matrix structure

18. Line v. Staff Authority • Line authority - function • the right to command immediate subordinates in the chain of command • an activity that contributes directly to profit generation • Staff authority - function • the right to advise but not command others • an activity that supports profit generation

19. Manager Responsibility Authority Accountability Subordinate Delegation of Authority • The assignment of direct authority and responsibility to a subordinate Adapted from Exhibit 11.8

20. Degree of Centralization • Centralization of authority • primary authority is held by upper management • Decentralization • significant authority is found in lower levels of the organization • Standardization • solving problems by applying rules, procedures, and processes

21. Job Design Job Specialization Job Rotation, Enlargement, & Enrichment Job Characteristics Model

22. 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

23. Blast From The PastFrom Farms to Factories to Telecommuting • Early work was farm based or in “cottage industries” • Industrial revolution led to factories and mobility • Technology allows people to again “work” at home

24. Job Rotation, Enlargement, & Enrichment • Job Rotation • periodically moving workers from one specialized job to another • Job Enlargement • increasing the number of tasks performed by a worker • Job Enrichment • adding more tasks and authority to an employee’s job

25. Job Characteristics Model (JCM) • A job redesign approach that seeks to increase employee motivation • Emphasizes internal motivation • Redesign work to make it more “interesting”

26. Personal & Work Outcomes Critical Psychological States Core Job Dimensions Skill Variety Task Identity Task Significance Experienced Meaningfulness of Work Autonomy Experienced Responsibility for Outcomes of Work Feedback Knowledge of Actual Results of Work Activities JCM (cont’d) High Internal Work Motivation High-quality Work Performance High Satisfaction with Work Low Absenteeism & Turnover Adapted from Exhibit 11.10

27. Job Redesign Techniques Combining Tasks Natural Work Units Establishing Client Relationships Vertical Loading Opening Feedback Channels

28. What Really Works? Making Jobs More Interesting & Motivating Job Satisfaction Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 66% Task Significance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 69%

29. What Really Works? (cont’d) Making Jobs More Interesting & Motivating Job Satisfaction Skill Variety 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 70% Autonomy 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 73%

30. What Really Works? (cont’d) Making Jobs More Interesting & Motivating Job Satisfaction Feedback 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 70% High Growth Need Strength 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 84%

31. What Really Works? (cont’d) Making Jobs More Interesting & Motivating Job Satisfaction Low Growth Need Strength 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 69%

32. What Really Works? (cont’d) Making Jobs More Interesting & Motivating Workplace Absenteeism Task Identity 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 63% Task Significance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 68%

33. What Really Works? (cont’d) Making Jobs More Interesting & Motivating Workplace Absenteeism Skill Variety 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 72% Autonomy 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 74%

34. What Really Works? (cont’d) Making Jobs More Interesting & Motivating Workplace Absenteeism Feedback 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 72% 84%

35. Learning ObjectivesDesigning Organizational Processes • explain the methods that companies are using to redesign internal organizational processes (i.e., intraorganizational processes). • describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes). After discussing this section, you should be able to:

36. Intraorganizational Processes Reengineering Empowerment Behavioral Informality

37. Reengineering • 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

38. Pooled Interdependence

39. Sequential Interdependence

40. Reciprocal Interdependence

41. Empowerment • A feeling of intrinsic motivation • Workers perceive meaning in their work • Employees are capable of self-determination • Employees are active rather than passive

42. Behavioral Informality Spontaneity Casualness Interpersonal familiarity Behavioral Formality Routine & regimen Specific rules Impersonal attachment Behavioral Informality

43. Interorganizational Processes Virtual Organizations Modular Organizations Boundaryless Organizations

44. What Really Happened?Reengineering at Exide Technologies • Implemented product structure around global business units • Problems associated with product basis caused a return to geography structure • Exide is still searching for the proper organizational structure