Topic 7: Deg Adaptive Organizations Organizing Organizing Is The Deployment 4i4xj

Topic 7: Deg Adaptive Organizations Organizing Organizing is the deployment of resources to achieve strategic goals. It is reflected in Division of labor into specific departments & jobs, Formal lines of authority, Mechanisms for coordinating diverse organizational tasks Organization Structure Organization structure is the framework in which the organization defines how task are divided, resources are deployed, and departments are coordinated. Organization Structure is defined as i) ii) iii) iv)

Set of formal tasks assigned Formal reporting relationships The design of systems to ensure effective coordination of employees across departments

The set of formal tasks and formal reporting relationships provided a framework for vertical control of the organization: Work Specialization and Division of labor. Tasks are subdivided into individual jobs Employees perform only the tasks relevant to their specialized function Jobs tend to be small, but they can be performed efficiently Chain of Command: Unbroken line of authority that links all persons in an organization Shows who reports to whom It is associated with two underlying principles – –

Unity of Command: employees held able to only one supervisor Scalar Principle: clearly defined line of authority

Chain of Command: Authority, Responsibility, ability and Delegation a) Authority: The chain of command illustrates the authority structure of the organization. Authority is the formal and legitimate right of a manager to make decisions and issue orders, and allocate resources to achieve organizationally desired outcomes. Authority is distinguished by three characteristics: (1) Authority is vested in organizational positions, not people. (2) Authority is accepted by subordinates. (3) Authority flows down the vertical hierarchy.

b) Responsibility is the duty to perform the task or activity as assigned. c) ability means that the people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command. d) Delegation is the process managers use to transfer authority and responsibility to positions below them in the hierarchy. Line Authority: Line departments perform the tasks that reflect the organization’s primary goals. They work directly with customers/products. Staff Authority: Staff departments are those departments that provide specialized skills in of line departments

Span of Management/Span of Control Number of employees who report to a supervisor Traditional view = seven subordinates per manager Lean organizations today = 30+ subordinates Reorganization to Increase Span of Management: Tall versus Flat Structure: Span of Control used in an organization determines whether the structure is tall or flat. Tall structure has a narrow span and more hierarchical levels. Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels. The trend has been toward wider spans of control

Factors Associated With Supervisor Involvement: – – – – – – – –

Work is stable and routine Subordinates perform similar work tasks Subordinates are concentrated in a single location Subordinates are highly trained Rules and procedure defining task activities are available systems and personnel are available for the manager Little time is required in nonsupervisory activities Managers’ preferences and styles favor a large span

Centralization and Decentralization

Change and uncertainty are usually associated with decentralization. The amount of centralization or decentralization must fit the firm’s strategy. During crisis or risk of company failure, authority may be centralization. Departmentalization – –

Basis for grouping positions into departments Choices regarding chain of command

Five traditional approaches: – – – – –

Functional Divisional Matrix Teams Virtual Networks

Vertical Functional Structure:

Divisional Structure: –

An organisation structure in which departments are grouped based on similar organisational outputs

–

An alternative for asg divisional responsibility is to group company activities by geographic region or customer group

Three types of Divisional Structure:

a) Geographic-based structure b) Product structure c) Customer-based strcture Functional Structure VS Divisional Structure: The primary difference between divisional and functional structures is that the chain of command from each function converges lower in the hierarchy In a divisional structure, differences of opinion among research, marketing, manufacturing and finance would be resolved at the divisional level rather than by the president Thus, the divisional structure encourages decentralization Decision making is pushed down at least one level in the hierarchy, freeing the president and other top managers for strategic planning Matrix Approach: An organisation structure that uses functional and divisional chains of command simultaneously in the same part of the organisation The matrix structure evolved as a way to improve horizontal coordination and information sharing

Team Approach: The vertical chain of command is a powerful means of control, but ing all decisions up the hierarchy takes too long and keeps responsibility at the top The team approach gives managers a way to delegate authority, push responsibility to lower levels, and be more flexible and responsive in the competitive global environment a) Cross-functional teams The teams which consist of employees from various functional departments who are responsible to meet as a team and resolve mutual problems Team typically still report to their functional departments, but they also report to the team, one member of whom may be the leader Cross-functional teams are used to provide needed horizontal coordination to complement an existing divisional or functional structure b) Permanent teams

It is a groups of employees who are organised in a way similar to a formal department Each team brings together employees from all functional areas focused on a specific task or project Emphasis is on horizontal communication and information sharing because representatives from all functions are coordinating their work and skills to complete a specific organisational task Authority is pushed down to lower levels, and front-line employees are often given the freedom to make decisions and take action on their own Virtual Network Approach: An organizational structure that disaggregates major functions to separate companies that are brokered by small headquarters organization. The organisation may be viewed as a central hub surrounded by a network of outside specialist Rather than being housed under one roof, services such as ing, design, manufacturing, and distribution are outsourced to separate organisations that are connected electronically to the central office The idea behind networks is that a company can concentrate on what it does best and contract out other activities to companies with distinctive competence in those specific areas, which enables a company to do more with less Approaches to Structural Design:

Struct ural

Advantages

Disadvantages

Appro ach ????

Can draw expertise worldwide

on

Weak boundaries

Highly flexible and responsive

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Reduced overhead costs Efficient use of resources Economic of scale In depth skill specialization and development

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Top manager direction and control Fast response Flexibility unstable environment

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Lack of control

in

Greater demands managers Employee weakened

on

loyalty

Poor communication across functional departments Slow response to external changes Lagging innovation Decisions concentrated at top of hierarchy, creating delay Duplication of resources across divisions Less technical depth and specialization

Foster concern for customer needs

Poor coordination across divisions

Excellent coordination across functional departments More efficient use of resources than single hierarchy

Frustration and confusion from dual chain of command

Flexibility Adaptable changing environment Interdisciplinary cooperation

to

High conflict between two sides of matrix Many than action

meetings, discussion

more than

Expertise available divisions ????

to

all

Reduced barriers among departments Increase compromise Shorter time

Dual loyalties and conflict Time and resources spent on meetings Unplanned decentralization

response

Quicker decisions Better morale, enthusiasm from employee involvement Organizing for Horizontal Coordination The Need for Coordination: Coordination refers to the quality of collaboration across departments. Without coordination, a company’s left hand will not act in concert with the right hand, causing problems and conflicts Required regardless of whether the organization has a functional, divisional, or team structure Task Forces, Teams, and Project Management Task Force: A task force is a temporary team or committee designed to solve a short-term problem involving several departments Team: In addition to creating task forces, companies also set up cross-functional teams A cross-functional team furthers horizontal coordination because participations from several departments meet regularly to solve ongoing problems of common interest

Similar to a task force except that it works with continuing rather than temporary problems and exist for several years. Project Manager: A project manager is a person who is responsible for coordinating activities of several departments on a full-time basis for the completion of a specific project Examples of Project Manager Relationships

Project manager is not a member of one of the departments being coordinated Project managers are located outside of the departments and have responsibility for coordinating several departments to achieve desired project outcomes Reengineering Business process reengineering: Radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed Change the way manager think about how work is done Focus on process rather than function Process = organized group of related tasks and activities that work together to transform inputs into outputs and create value Reengineering at Michigan Casting Center:

Structure Follows Strategy: The right structure is designed to fit the organization’s strategy Recent study demonstrated that business performance is strongly influenced by how well the company structure is aligned with its strategic.