Download Organizing the Vertical Structure

Chapter 10
Designing Adaptive Organizations
Organizing
The deployment of organizational resources to
achieve strategic goals
 Division of labor
 Lines of authority
 Coordination
• All organizations wrestle with structural design
and reorganization
• Organizing is important because it follows from
strategy
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Organizing the Vertical
Structure
Organizing structure defines:
 The set of formal tasks assigned to individuals and
departments
 Formal reporting relationships
 The design of the systems to ensure effective
coordination
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Organizing Concepts
Work Specialization is the degree to which
organizational tasks are subdivided into
individual jobs; also called division of labor
Chain of Command is an unbroken line of
authority that links all individuals in the
organization and specifies who reports to whom
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Authority, Responsibility,
and Delegation
 Authority is vested in organizational positions,
not people
 Authority is accepted by subordinates
 Authority flows down the vertical hierarchy
 Accountability is the mechanism through
which authority and responsibility are aligned
 Delegation is the process managers use to
transfer authority and responsibility down the
chain
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10.1 Sample Organization Chart
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Line and Staff Authority
Line departments perform
primary business tasks
 Sales
 Production
Staff departments support
line departments




Marketing
Human Resources
Accounting
Research
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Span of Management
The number of employees
reporting to a supervisor
• Tall Organizations have more
levels and narrow span
• Flat Organizations have a
wide span and fewer levels
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Less Supervision/Larger
Spans of Control
 Work is stable and routine
 Subordinates perform similar work
 Subordinates are in one location
 Highly trained/require little direction
 Rules and procedures are defined
 Few planning or nonsupervisory activities
 Manager’s preference
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10.2 Reorganization and
Span of Management
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Centralization and
Decentralization
• Centralization – decision authority is located
near the top of the organization
• Decentralization – decision authority is
pushed downward to all levels
• Factors that influence centralization versus
decentralization:
– Change and uncertainty are usually associated
with decentralization
– Strategic fit
– Crisis requires centralization
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Departmentalization:
Functional and Divisional
• Vertical Functional Approach
– Grouping of positions into departments based
on skills, expertise, work activities, and resource
use
• Divisional Approach
– Grouping based on organizational output
• Product, Program, Business (self-contained unit)
• Geographic or Customer-Based Divisions
Geographic or Customer-Based Divisions group
activities by geography or customer
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10.4 Functional versus
Divisional Structures
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10.5 Geographic-Based Global
Organization Structure
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Departmentalization:
Matrix and Team Approach
• Matrix approach combines functional and
divisional approaches
– Improve coordination and information
– Dual lines of authority
• Team approach is a very widespread trend
– Allows managers to delegate authority
– Flexible, responsive
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10.6 Dual-Authority Structure in a
Matrix Organization
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10.7 Global Matrix Structure
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Virtual Network Approach
• Extends idea of horizontal coordination and
collaboration
– Partnerships
– Alliances
• Could be a loose interconnected group
– i.e., outsourcing
Virtual network structure means that the firm
subcontracts most of its major functions to
separate companies
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10.8 Network Approach to
Departmentalization
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10.9 Structural Advantages and
Disadvantages
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Organizing for Horizontal
Coordination
• Companies need more flexibility than vertical
structure can offer
– Meet fast-shifting environment
– Break down barriers between departments
– Need integration and coordination
• Lack of coordination and cooperation can cause
information problems
– Growing global challenge
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10.10 Evolution of Organization
Structures
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Reengineering
…or business process reengineering,
is the radical redesign of business
processes to achieve dramatic
improvements in cost, quality,
service, and speed
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Task Forces, Teams, and
Project Management
Task Force – a temporary team or
committee formed to solve a
specific short-term problem
involving several departments
Cross-functional Team – furthers
horizontal coordination by
including members across the
organization
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Project Manager –
person responsible
for coordinating
activities of
several
departments for
the completion of
a specific project
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10.11 Project Manager
Relationships to Departments
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Structure Follows Strategy
 Business performance is
influenced by structure
 Strategic goals should drive
structure
 Structure should facilitate
strategic goals
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10.12 Factors Affecting
Organization Structure
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10.13 Relationship of Structural
Approach to Strategy
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Structure Fits the Technology
• Knowledge, tools, techniques, and activities
should match production activities
• Manufacturing firms can be categorized
according to:
– Small-batch and unit production
– Large-batch and mass production
– Continuous process production
• The technical complexity of each type of firm
differs
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10.14 Manufacturing Technology
and Organization Structure
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