Management Chapter 9: Designing Adaptive Organizations

Organizational Structure
the vertical and horizontal configuration of departments, authority, and jobs within a company
Organizational process
the collection of activities that transform inputs into outputs that customers value
Steps of the Organizational Process
1. feedback from customers
2. customer needs/problems
3. identify software
– issues
– changes
– functions
4. recode software
5. test new software
6. changes to beta software
7. feedback from beta testers
8. distribute to customers
Departmentalization
subdividing work and workers into separate units responsible for particular business functions or areas of expertise
Functional departmentalization
organizing work and workers into separate units responsible for particular business functions or areas of expertise
What does a common functional structure consist of?
accounting, sales, marketing, production and human resources departments
What are the advantages of functional departmentalization?
1. allows work to be done by highly qualified specialists
2. lowers costs be reducing duplication
3. communication and coordination are less problematic
Product Departmentalization
organizing work and workers into separate units responsible for producing particular products or services
What are the advantages of product departmentalization?
1. allows managers and workers to specialize in one area of expertise
2. makes it easier for top managers to assess work-unit performance (clear separation)
3. decision making faster
4. fewer conflicts compared to functional departmentalization
What are the disadvantages of product departmentalization?
1. duplication – higher costs
2. challenge of coordinating across the different product departments
Customer departmentalization
organizing work and workers into separate units responsible for particular kinds of customers
What are the advantages of customer departmentalization?
1. focuses the organization on customer needs rather than on products or business functions
What are the disadvantages of customer departmentalization?
1. leads to duplication of resources
2. emphasis on meeting customers’ needs may lead workers to make decisions that please customers needs but hurt the business
Geographic departmentalization
organizing work and workers into separate units responsible for doing business in particular geographic areas
What are the advantages of geographic departmentalization?
1. helps companies respond to the demands of different markets
2. can reduce costs by locating unique organizational resources closer to customers
What are the disadvantages of geographic departmentalization?
1. lead to duplication of resources
2. difficult to coordinate departments that are literally thousands of miles from each other and whose managers have very limited contact with each other
Matrix Departmentalization
a hybrid organizational structure in which two or more forms of departmentalization, most often product and functional, are used together
Simple matrix
a form of matrix departmentalization in which managers in different parts of the matrix negotiate conflicts and resources
Characteristics of matrix departmentalization
1. report to 2 bosses, one from each core part
2. more cross-functional interaction
3. requires significant coordination between managers in the different parts of the matrix
What are the advantages of matrix departmentalization?
1. allows companies to manage in an efficient manner large, complex tasks like researching, developing, and marketing pharmaceuticals or carrying out complex global businesses
2. pool of resources available to carry out large, complex tasks
What are the disadvantages of matrix departmentalization?
1. high level of coordination required to manage the complexity involved in running large, ongoing projects at various levels of completion
Complex matrix
a form of matrix departmentalization in which managers in different parts of the matrix report to matrix managers, who help them sort out conflicts and problems
Authority
the right to give commands, take action, and make decisions to achieve organizational objectives
Chain of command
vertical line of authority that clarifies who reports to whom throughout the organization
Unity of command
a management principle that workers should report to just one boss
Line authority
the right to command immediate subordinates in the chain of command
Staff authority
the right to advise, but not command, others who are not subordinates in the chain of command
Line function
an activity that contributes directly to creating or selling the company’s products
Staff function
an activity that does not contribute directly to creating or selling the company’s products, but instead supports line activities
Delegation of authority
the assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible
Centralization of authority
the location of most authority at the upper levels of the organization
Decentralization
the location of a significant amount of authority in the lower levels of the organization
Standardization
solving problems by consistently applying the same rules, procedures, and processes
Job design
the number, kind and variety of tasks that individual workers perform in doing their jobs
Job specialization
-A job that is a small part of a larger task or process
Job rotation
periodically moving workers from one specialization job to another to give them more variety and the opportunity to use different skills
Job enlargement
increasing the number of different tasks that a worker performs within one particular job
Job enrichment
increasing the number of tasks in a particular job and giving workers the authority and control to make meaningful decisions about their work
Job characteristics model
an approach to job redesign that seeks to formulate jobs in ways that motivate workers and lead to positive work outcomes
Internal motivation
motivation that comes from the job itself rather than from outside rewards
Skill variety
the number of different activities performed in a job
Task identity
the degree to which a job, from beginning to end, requires the completion of a whole and identifiable piece of work
Task significance
the degree to which a job is perceived to have a substantial impact on others inside or outside the organization
Autonomy
the degree to which a job a perceived to have a substantial impact on other inside or outside the organization
Feedback
the amount of information the job provides to workers about their work performance
Mechanistic organization
an organization characterized by specialized jobs and responsibilities; precisely defined, unchanging roles; and a rigid chain of command based on centralized authority and vertical communication
Organic organization
an organization characterized by broadly defined jobs and responsibility; loosely defined, frequently changing roles; and decentralized authority and horizontal communication based on task knowledge
Intraorganizational process
the collection of activities that take place within an organization to transform inputs into outputs that customers value
Reengineering
Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in cost, quality, service and speed
Task interdependence
the extent to which collective action is required to complete an entire piece of work
Pooled interdependence
work completed by having each job or department independently contribute to the whole
Sequential interdependence
work completed in succession, with one group’s or job’s outputs becoming the inputs for the next group or job
Reciprocal interdependence
work completed by different jobs or groups working together in a back-and-forth manner
Empowering workers
permanently passing decision-making authority and responsibility from managers to workers by giving them the information and resources they need to make and carry out good decisions
Empowerment
feeling of intrinsic motivation, in which workers perceive their work to have impact and meaning and perceive themselves to be competent and capable of self-determination
Interorganizational process
a collection of activities that take place among companies to transform inputs into outputs that customers value
Modular organizations
an organization that outsources noncore business activities to outside companies, suppliers, specialists, or consultants
In the modular organization, what are the outsourced noncore business activities?
1. product distribution
2. website design
3. advertising
4. payroll
5. accounting
6. packaging
In the modular organization, what are the core business activities?
1. training
2. research and development
3. human resources
4. information technology
5. customer service
6. sales
7. product design
8. manufacturing
What are the advantages of modular organization?
1. because modular organizations pay for outsourced labor, expertise, or manufacturing capabilities only when needed, they can cost significantly less to run than traditional organizations
What are the disadvantages of modular organization?
1. loss of control that occurs when key business activities are outsourced to other companies
Virtual organization
an organization that is part of a network in which many companies share skills, costs, capabilities, markets, and customers to collectively solve customer problems or provide specific products or services