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Chapter 9Designing Adaptive
Organizations
© 2015 Cengage Learning MGMT7
© 2015 Cengage Learning
9-1 describe the departmentalization approach to organizational structure
9-2 explain organizational authority9-3 discuss the different methods for job design9-4 explain the methods that companies are using to
redesign internal organizational processes (i.e., intraorganizational processes)
9-5 describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes).
Structure and Process
• Organizational structure
• Organizational process
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Thomson Reuters
© 2015 Cengage Learning
Process View of Microsoft’s Organization
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Departmentalization
• Functional
• Product
• Customer
• Geographic
• Matrix © 2015 Cengage Learning 9-1
Functional Departmentalization
• Advantages– allows work done by highly qualified
specialists– lowers costs by reducing duplication– makes communication and coordination
easier
• Disadvantages– cross-department coordination can be
difficult– may lead to slower decision making
© 2015 Cengage Learning9-1
Functional Departmentalization
© 2015 Cengage Learning 9-1
Product Departmentalization
• Advantages– allows people to specialize in one area
of expertise – makes it easier to assess performance– makes decision making faster
• Disadvantages– duplication – coordination across different product
departments
© 2015 Cengage Learning9-1
Product Departmentalization: UTC
© 2015 Cengage Learning 9-1
Customer Departmentalization
• Advantages– focuses organization on customer needs– allows companies to specialize products
and services to customer needs
• Disadvantages– duplication of resources– workers might please customers but
hurt business
© 2015 Cengage Learning 9-1
Customer Departmentalization: Swisscom AG
© 2015 Cengage Learning 9-1
Geographic Departmentalization
• Advantages– helps companies respond to different
markets– reduces costs by locating unique
resources closer to customers
• Disadvantages– duplication of resources– difficult to coordinate departments
© 2015 Cengage Learning 9-1
Geographic Departmentalization: AB InBev Company
© 2015 Cengage Learning 9-1
Matrix Departmentalization
• Advantages– allows companies to efficiently manage
large, complex tasks– gives much more diverse set of expertise
and experience
• Disadvantages– requires a high level of duplication– confusion and conflict between project
bosses– requires much more management skill
© 2015 Cengage Learning 9-1
Matrix Departmentalization: Procter & Gamble
© 2015 Cengage Learning 9-1
Chain of Command
• Chain of command
• Unity of command
© 2015 Cengage Learning 9-2
Authority
• Line authority• Staff authority
• Line function • Staff function
© 2015 Cengage Learning9-2
Delegation
© 2015 Cengage Learning9-2
Degree of Centralization
• Centralization of authority
• Decentralization
• Standardization
© 2015 Cengage Learning 9-2
Advantages of Decentralization
• Develops employee capabilities
• Faster decision making
• More satisfied employees and customers
• Better employee performance
© 2015 Cengage Learning 9-2
Job Specialization
• Job comprises a smaller part of a larger task
• Easy to learn
• Low variety
• High repetition
© 2015 Cengage Learning 9-3
Job Rotation, Enlargement, Enrichment
• Rotation
• Enlargement
• Enrichment
© 2015 Cengage Learning 9-3
Job Characteristics Model
9-3© 2015 Cengage Learning
Internal Motivation
• Experience work as meaningful
• Experience responsibility for work outcomes
• Knowledge of results
© 2015 Cengage Learning9-3
Core Job Characteristics
• Skill variety
• Task identity
• Task significance
• Autonomy
• Feedback© 2015 Cengage Learning 9-3
To Increase Internal Motivation
• Combine tasks
• Natural work units
• Establish client relationships
• Vertical loading
• Open feedback channels© 2015 Cengage Learning9-3
Intraorganizational Processes
The collection of activities that take place within an organization to
transform inputs into outputs that customers value.
© 2015 Cengage Learning9-4
Reengineering
“the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical,
contemporary measures of performance, such as cost, quality, service and speed.”
© 2015 Cengage Learning9-4
Reengineering and Task Interdependence
9-4© 2015 Cengage Learning
Empowerment
• Empowering workers
• Empowerment
© 2015 Cengage Learning 9-4
Interorganizational Processes
A collection of activities that occur among companies to transform inputs
into outputs that customers value.
© 2015 Cengage Learning 9-5
Modular Organization
9-5© 2015 Cengage Learning
Modular Organizations
• Advantages– reduced costs
• Disadvantages– loss of control– noncore activities that are outsourced
may become source of advantage– suppliers to whom work is outsourced
can become competitors
© 2015 Cengage Learning9-5
Virtual Organizations
9-5© 2015 Cengage Learning
Virtual Organizations
• Advantages– shared costs– fast and flexible
• Disadvantages– difficult to control quality of work done
by partners– requires tremendous managerial skills
© 2015 Cengage Learning 9-5
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Modern Shed
1. Describe how Modern Shed functions as a modular organization.
2. What are the advantages and disadvantages of Modern Shed’s organizational structure?
© 2015 Cengage Learning
