Chapter 9 Designing Adaptive Organizations

1. Management Principles Chapter 9Designing Adaptive Organizations Craig W. Fontaine, Ph.D.

2. What Is Organizational Structure? Organizational Structure How major organizational work activities are formally divided, grouped, and coordinated. • Key Elements: • Work specialization • Departmentalization • Chain of command • Span of control • Centralization and decentralization • Formalization

3. Key Design Questions and Answers for Designing the Proper Organization Structure The Key Question The Answer Is Provided By 1. To what degree are tasks Work specializationsubdividedinto separate jobs? 2. On what basis will jobs be grouped Departmentalizationtogether? 3. To whom do individuals and groups Chain of command report? 4. How many individuals can a manager Span of control efficiently and effectively direct? 5. Where does decision-making Centralizationauthority lie? and decentralization 6. To what degree will there be rules Formalization and regulations to direct employees and managers?

4. What Is Organizational Structure? Work Specialization The degree to which tasks in the organization are subdivided into separate jobs. • Division of labor: • Makes efficient use of employee skills • Increases employee skills through repetition • Less between-job downtime increases productivity • Specialized training is more efficient. • Allows use of specialized equipment.

5. What Is Organizational Structure? • Grouping Activities By: • Function • Product • Geography • Process • Customer Departmentalization The basis by which jobs are grouped together.

6. Key Concepts in Organizational Structure Authority The rights inherent in a managerial position to give orders and to expect the orders to be obeyed. Chain of Command The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom. Unity of Command A subordinate should have only one superior to whom he or she is directly responsible. Span of ControlThe number of subordinates a manager can efficiently and effectively direct.

7. Contrasting Spans of Control

8. Key Concepts in Organizational Structure Centralization The degree to which decision making is concentrated at a single point in the organization. Decentralization The degree to which decision making is spread throughout the organization. Formalization The degree to which jobs within the organization are standardized.

9. Dimensions of Organizational Structures • Organizational structures have two dimensions: vertical and horizontal • The vertical dimension refers to the number of hierarchical levels in the company: “tall structures” have many more levels then “flat structures” • Tall structures typically have a “narrow” (less people) span of control and flat structures have “wider” span of control (more people). • Tall structure are characterized by centralized decision making at the top, flat structures normally have more local decentralized decision making. • The horizontal dimension is the organization structure element which divides work into specific jobs/tasks and assigns jobs into units such as departments. (These are described in detail later in the presentation)

10. Dimensions of Organizational Structures • Organizational structures have two dimensions: vertical and horizontal • The vertical dimension refers to the number of hierarchical levels in the company: “tall structures” have many more levels then “flat structures” • Tall structures typically have a “narrow” (less people) span of control and flat structures have “wider” span of control (more people). • Tall structure are characterized by centralized decision making at the top, flat structures normally have more local decentralized decision making. • The horizontal dimension is the organization structure element which divides work into specific jobs/tasks and assigns jobs into units such as departments.

11. VerticaL Dimension (Tall or Flat)

12. Tall or Flat – Advantages and Disadvantages

13. Horizontal Dimension • The horizontal dimension defines how work/jobs are grouped or Departmentalization. • Popular approaches to departmentalization are: • By function – Functional Departmental Structure • By product, service or customer type – Divisional Departmental Structure • When customers or jobs are scattered over a large geographic area and have similar needs based on their location, a Geographic organizational structure (a type of Divisional Structure) might be appropriate. • Less common is the Matrix organizational structure, which combines two structures. In a matrix structure; product, project or client/regional managers, borrow talent from the specialized functional areas in achieve tasks.

14. Functional

15. Divisional • Divisional Structures can also be by customer type: • Consumer Products • Commercial Products • Military Products

16. Geographic (Type of Divisional)

17. Teams can help Team Structure The use of teams as the central device to coordinate work activities. • Characteristics: • Breaks down departmental barriers/silos. • Decentralizes decision making at the team level. • Requires employees to be generalists as well as specialists. • Creates a “flexible bureaucracy.”

18. Matrix

19. Differing Models of Structure Mechanistic Model A structure characterized by extensive departmentalization, high formalization, a limited information network, and centralization. Organic Model A structure that is flat, uses cross-hierarchical and cross-functional teams, has low formalization, possesses a comprehensive information network, and relies on participative decision making.

20. Why Do Structures Differ? – Strategy Innovation StrategyA strategy that emphasizes the introduction of major new products and services. Cost-minimization StrategyA strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting. Imitation StrategyA strategy that seeks to move into new products or new markets only after their viability has already been proven.

21. The Strategy-Structure Relationship Strategy Structural Option Innovation Organic: A loose structure; low specialization, low formalization, decentralized Cost minimization Mechanistic: Tight control; extensive work specialization, high formalization, high centralization Imitation Mechanistic and organic: Mix of loose with tight properties; tight controls over current activities and looser controls for new undertakings

22. Organization Structure: Its Determinants and Outcomes Implicit Models of Organizational Structure Perceptions that people hold regarding structural variables formed by observing things around them in an unscientific fashion.

23. Boundaryless Organization • An organization in which chains of command are eliminated, spans of control are unlimited, and rigid departments give way to empowered teams. • Modular Organization: An organization that surrounds itself by a network of other organizations to which it regularly outsources noncore functions. • Virtual Organization: A highly flexible, temporary organization formed by a group of companies that join forces to exploit a specific opportunity.

24. Modular Organization

26. Pros and Cons of Modular Structures

27. Virtual Organization

28. Pros and Cons of Virtual Structures

29. Job Design

30. Job Design • The design of work involves determining the appropriate task content, sequences, interrelationship and context of jobs • Redesigning work can increase worker performance and satisfaction • Approaches include: • Work simplification • Job Rotation • Job enlargement • Job enrichment

31. Work Simplification • Work Simplification refers to the process of reducing a job to its component parts than reassembling those parts into the most efficient work process, it includes: • Mechanical pacing • Repetitive work • Fractionalization • Enhanced tools and techniques • Can cause significant dysfunction!

32. Job Design: Creating Meaningful Jobs • Job Rotation • The periodic shifting of a worker from one task to another. • Reduces boredom and increases motivation through diversifying the employee’s activities. • Job Enlargement • The horizontal expansion of jobs. • Attacks the lack of diversity in overspecialized jobs; does little to instill challenge or meaningfulness to a worker’s activities. • Job Enrichment • The vertical expansion of jobs. • Employee does a complete activity • Expands the employee’s freedom and independence, increases responsibility, and provides feedback.

33. What people want from their jobs & design principles • Reasonably demanding work with some variety • Opportunity to learn • Some decision making • Social support and recognition • Significance & meaning • Some desirable future Job design principles At the level of the individual • Respect • Contribution to product • Quantity & quality - feedback results quickly • Meaningful whole task • A whole job - plan, do, evaluate • Variety • Optimum cycle times

34. The Job Characteristics Model Source: Adapted from J. R. Hackman and G. R. Oldham, Work Redesign (Reading, MA: Addison-Wesley, 1980).

35. Job Characteristics Model

36. Types of Flexible Scheduling • Compressed workweek/year • Flextime • Job Sharing • Telecommuting

37. Employee Responses to Flexible Work Arrangements • 94 percent are very satisfied with their work arrangements • 70 percent reported less stress • 81 percent said they were more effective at balancing work and their outside lives • 48 percent use flex work to deal with family responsibilities and child and/or elder care • 36 percent said they would leave the company if flex work were not available • 78 percent said their opportunities for advancement were the same or better than when they worked a traditional schedule