Chapter 9

Chapter 9
Designing Adaptive
Organizations
MGMT
Designed & Prepared by
Chuck Williams B-books, Ltd.
1
Copyright ©2008 Cengage Learning. All rights reserved
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.
2
Process
Process View
View of
of Microsoft’s
Microsoft’s Organization
Organization
3
Designing Organizational
Structures
After 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.
4
Departmentalization
Functional
Functional Product
Product
Customer
Customer Geographic
Geographic Matrix
Matrix
1
5
Functional Departmentalization
1.1
6
Functional Departmentalization
Advantages Disadvantages
 Work done by highly  Cross-department

skilled specialists coordination can be
 Lowers costs through difficult
reduced duplication  May lead to slower
 Communication and decision making
coordination  Produces managers
problems are lessened with narrow
experiences
1.1
7
Product Departmentalization
United
United Technologies
Technologies
UTC
UTCFire
Fireand
and
Carrier
Carrier Security
Security
Hamilton
Hamilton Otis
Otis
Sundstrand
Sundstrand
Pratt
Pratt&&Whitney
Whitney Sikorsky
Sikorsky
--Administrative services
--Communication & public relations
--Customer service & support UTC
UTCPower
Power
--E-Business
--Engineering
1.2 --etc…
8
Product Departmentalization
• Managers specialize, • Duplication of activities

but have broader • Difficult to coordinate
experiences across departments
• Easier to assess work-
unit performance
• Decision-making is
faster
1.2
9
Customer Departmentalization
1.3
10
Customer Departmentalization
• Focuses on customer • Duplication of

needs resources
• Products and services • Difficult to coordinate
tailored to customer across departments
needs • Efforts to please
customers may hurt the
company
1.3
11
Geographic Departmentalization
Operation
Enterprises
ofOperation
Coca-ColaEnterprises
Territoriesof
Coca-Cola
Territories
1.4
12
Geographic Departmentalization
• Responsive to the • Duplication of

demands of different resources
market areas • Difficult to coordinate
• Unique resources across departments
located close to the
customer
1.4
13
Matrix Departmentalization
Procter
Procter &
& Gamble
Gamble
Household North
North
Household Western
Western Asia,
Asia,India,
India,
care America
America
care Europe
Europe Australia
Australia
Country
Country
Beauty
BeautyCare
Care Managers
Managersin in
Spain, UAE,
Spain, UAE,
Kenya,
Kenya,etc.
etc.
Health
Healthand
and
Well-being
Well-beingcare
care Country
Country
Managers
Managersin in
India,
India,South
South
Korea,
Korea,etc.
etc.
1.5
14
Matrix Departmentalization
• Efficiently manage • Requires high levels

large, complex tasks of coordination
• Pool of available • Conflict between
resources bosses
• Requires high levels of
management skills
1.5
15
Organizational Authority
Chain of Line versus

Command Staff Authority
Delegation
Delegation Degree
Degreeofof
of
of Authority
Authority Centralization
Centralization
2
16
Chain of Command
• The vertical line of authority in an
organization
• Clarifies who reports to whom
• Unity of command
– matrix organizations violate
this principle
– workers report to only one boss
2.1
17
Line versus Staff Authority
• Line authority
– the right to command immediate subordinates in
the chain of command
• Staff authority
– the right to advise but not command others
2.2
18
Delegation of Authority
The assignment of direct authority and

responsibility to a subordinate to complete
tasks for which the manager is normally
responsible.
2.3
19
2.3
20
How to be a More
Effective Delegator
1. Trust your staff to do a good job.
2. Avoid seeking perfection.
3. Give effective job instructions.
4. Know your true interests.
5. Follow up on progress.
6. Praise the efforts of your staff.
7. Don’t wait to the last minute to delegate.
8. Ask questions, expect answers, assist employees.
9. Provide the resources you would expect if doing the
assignment yourself.
2.3 10. Delegate to the lowest possible level.
21
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
2.4
22
Decentralization at Beyond the Book
Whole Foods
• Operating decisions at Whole Foods—from what to
stock, what to charge for it, and whom to hire—are
made not from the top, but by individual work teams.
• Each team is in charge of a department, like wine or
seafood, or produce.
• New employees are assigned to a team for a 4-week
trial. At the end of 4 weeks, the new member must be
approved by 2/3 vote of the team to remain on it.
• Whole Foods believes that decisions should be made by
those most impacted by them.
Source: “Break Free!,” Fortune, 1 October 2007, 122-123.
23
Job Design
Job
JobRotation,
Rotation, Job
Job
Job
Job Enlargement,
Enlargement, Characteristics
Characteristics
Specialization
Specialization Enrichment
Enrichment Model
Model
3
24
Job Specialization
 A job that is a small
part of a larger task or
process
 Jobs are simple, easy
to learn, & economical
 Can lead to low
satisfaction, high
absenteeism, &
employee turnover
3.1
25
Job Rotation, Enlargement,
and 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
3.2
26
Intraorganizational Processes
Reengineering
Reengineering Empowerment
Empowerment
4
33
Reengineering
 The fundamental rethinking and radical redesign
of business processes
 Intended to achieve dramatic improvements

in performance
 Change the orientation from vertical

to horizontal
 Change task interdependence

4.1
34
Reengineering and
Task Interdependence
4.1
35
Empowerment
Permanently
Permanentlypassing
passingdecision-making
decision-making
authority
authorityand
andresponsibilities
responsibilitiesfrom
from
Empowering
Empowering managers
managersto toworkers
workersby
bygiving
givingthem
them
Workers
Workers the
theinformation
informationand
andresources
resourcestheythey
need
needtotomake
makegood
gooddecisions
decisions
 A feeling of intrinsic motivation

 Workers perceive meaning in their work
 Employees are capable of self-determination
4.2
36

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The vertical and horizontal configuration

The collection of activities that transform

1. describe the departmentalization approach to

 Work done by highly  Cross-department

• Managers specialize, • Duplication of activities

• Focuses on customer • Duplication of

• Responsive to the • Duplication of

• Efficiently manage • Requires high levels

Chain of Line versus

• Clarifies who reports to whom

The assignment of direct authority and

Source: “Break Free!,” Fortune, 1 October 2007, 122-123.

 Intended to achieve dramatic improvements

 Change the orientation from vertical

 Change task interdependence

 A feeling of intrinsic motivation

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