Organization Development and Change

Restructuring Organizations

Thomas G. Cummings
Christopher G.
Worley
 Learning Objectives

• To understand the basic principles of

technostructural design
• To understand the three basic structural choices and two
advanced structural choices available to organizations
• To understand the process of downsizing and
reengineering
The Divisional Organization
C hief E xe
c u t i v eO
fficer
C hief Fin V PR ese
a n cOi fafli arch
cer

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M a nA as g e anage n a gEe ur r
N o r t hA m e
ia rica ope

VPHu VP O p e r a t V PS ales
m easno u
R ions aMnadr k e
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Cummings & Worley, 8e 14-7

(c)2005 Thomson/South-Western
 The Matrix Organization
President
CEO

V P Finance VP Hum an Re
sources

S enior V P S enior
Program s V PO p e r
ations

VP R ese V P E ngin VP M anufa V P M ark

arch eering cturing eting

Program M a
nager
Aircraft
Program M a
n a g e rN a v i g a
tion S ystem
sP r o g r a m M a
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S pace S yste
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 Characteristics of
Process-Based Structures
 Processes drive structure
 Work adds value
 Teams are fundamental
 Customers define performance
 Teams are rewarded for performance
 Teams are tightly linked to suppliers and
customers
 Team members are well informed and trained
The Process-Based Structure
S enior M anagem ent Te
am
C hair and K ey
S upport P rocess O wn
D evelope i nr sg N ew Product
s Process
P rocess O wner
C ross Functional Tea
m M em bers
Ac q u i r i n g a n d F i l l i n g C ust
om er O rders Process
P rocess O wner
C ross Functional Tea
m M em bers
S upporting C ustom er
U sage Process
P rocess O wner
C ross Functional Tea
m M em bers
 The Network Organization
Designer Producer
Organizations Organizations

Broker
Organization

Supplier Distributor
Organizations Organizations
 Types of Networks
 Internal Market Network
 Vertical Market Network
 Intermarket Network
 Opportunity Network
 The Downsizing Process
• Clarify the organization’s strategy
• Assess downsizing options and make relevant choices
• Implement the changes
• Address the needs of survivors and those who leave
• Follow through with growth plans
 Downsizing Tactics
Tactic Characteristics Examples
 Reduces headcount  Attrition
Workforce  Short-term focus  Retirement/buyout
Reduction  Fosters transition  Layoffs

 Changes  Eliminate functions,

Organization organization layers, products
Redesign  Medium-term focus  Merge units
 Fosters transition &  Redesign tasks
transformation
 Changes culture  Change
Systemic  Long-term focus responsibilities
 Fosters  Foster continuous
transformation improvement
 Downsizing is
normal
 The Reengineering Process
• Prepare the organization
• Specify the organization’s strategy and
objectives
• Fundamentally rethink the way work
gets done
– Identify and analyze core business
processes
– Define performance objectives
– Design new processes
• Restructure the organization around the new
business processes.
 Characteristics of Reengineered
Organizations
 Work units change from functional departments to process teams
 Jobs change from simple tasks to multidimensional work
 People’s roles change from controlled to empowered
 The focus of performance measures and compensation shifts
from activities to results.
 Organization structures change from hierarchical to flat
 Managers change from supervisors to coaches; executives change
from scorekeepers to leaders