chapter 11 designing adaptive organizations. 2 what would you do? reengineering at exide...
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Chapter 11
Designing Adaptive Organizations
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What Would You Do? Reengineering at Exide Technologies Financial losses are increasing
Company share price is dropping Company’s debt load is soaring
Is currently organized geographically company managers in each country who compete with other divisions
What organization scheme should it use to solve these problems?
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After discussing this section, you should be able to:
Learning ObjectivesDesigning Organizational Structure1. describe the departmentalization approach to
organizational structure.2. explain organizational authority.3. discuss the different methods for job design.
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5 Methods of Departmentalization
Functional
Product
Customer
Geographic
Matrix
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Functional Departmentalization
Advertising Agency
Sales
Accounting
InformationSystems
HumanResources
PrintAdvertising
Art Department
RadioAdvertising
Creative Department
Adapted from Exhibit 11.3
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Functional Departmentalization (cont’d)
Advantages Creates highly skilled
specialists Lowers costs through
reduced duplication Communication and
coordination problems are lessened
Disadvantages Cross-department
coordination can be difficult
May lead to slower decision making
Produces managers with narrow experiences
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Product Departmentalization
General Electric
Aircraft Engines Appliances
Capital Services Lighting
NBC TelevisionTechnical Products
and Services
Power SystemsPlastics
Industrial Products& Control Systems
Adapted from Exhibit 11.4
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Product Departmentalization (cont.)
Advantages Managers specialize
but have broader experiences
Easier to assess work-unit performance
Decision-making is faster
Disadvantages Duplication of activities Difficult to coordinate
across departments
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Been There, Done That
Business was slow to develop Began to focus on the customer
“orbit” around their customers Egalitarian culture and open communication are
key
igus and the Solar System
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Customer Departmentalization
Classic Cards Air, Car & HotelReservations
ExpenseManagement
Solutions
Advice &Planning
American ExpressCorporation
Lifestyle Cards Vacation & LastMinute Specials
SmallBusinessesBanking
Reward Cards WorldwideTravel Offices
FinancialServicesBrokerage
Cards TravelBusinessServices
FinancialServices
Adapted from Exhibit 11.5
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Customer Departmentalization (cont’d)
Advantages Focuses on customer
needs Products and services
tailored to specific customers
Disadvantages Duplication of activities Difficult to coordinate
across departments Efforts to please
customers may hurt the company
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Geographic Departmentalization
Coca-ColaEnterprises
Central NorthAmerica Group
Eastern NorthAmerica Group
EuropeanGroup
Western NorthAmerica Group
Adapted from Exhibit 11.6
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Geographic Departmentalization (cont’d)
Advantages Responsive to the
demands of different market areas
Unique resources located close to the customer
Disadvantages Duplication of
resources Difficult to coordinate
across departments
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Matrix DepartmentalizationPharmacia & Upjohn Headquarters
Central Nervous System
Thrombosis
Metabolic Diseases
Infectious Diseases
Women’s Health
Inflamatory Diseases
United StatesUnited States•Research•Marketing•Manufacturing
EuropeEurope•Research•Marketing•Manufacturing
JapanJapan•Research•Marketing•Manufacturing
United StatesUnited StatesUrologyUrology•Research
•Marketing•Manufacturing
EuropeEuropeCritical CareCritical Care
•Research•Marketing
•Manufacturing
Adapted from Exhibit 11.7
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Matrix Departmentalization (cont’d)
Advantages Efficiently manage
large, complex tasks Effectively complete
large, complex tasks
Disadvantages Requires high levels of
coordination Conflict between
bosses Requires high levels of
management skills
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Organizational Authority
Chain of Command
Line Versus Staff Authority
Delegation of Authority
Degree of Centralization
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Chain of Command
The vertical line of authority in an organization
Clarifies who reports to whom Unity of command
workers report to only one boss “violated” by the matrix structure
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Line v. Staff Authority
Line authority - function the right to command immediate subordinates in
the chain of command an activity that contributes directly to profit
generation Staff authority - function
the right to advise but not command others an activity that supports profit generation
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Delegation of Authority The assignment of direct authority and
responsibility to a subordinate
Manager
Subordinate
ResponsibilityResponsibility AuthorityAuthority
AccountabilityAccountability
Adapted from Exhibit 11.8
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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
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Job Design
Job Specialization
Job Rotation, Enlargement, &Enrichment
Job Characteristics Model
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Job Specialization
Breaking jobs into small tasks Jobs are simple, easy to learn, and
economical Can lead to boredom, low satisfaction, high
absenteeism, and employee turnover
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Blast From The PastFrom Farms to Factories to Telecommuting Early work was farm based
or in “cottage industries” Industrial revolution led to factories and
mobility Technology allows people to again “work” at
home
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Job Rotation, Enlargement, & 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
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Job Characteristics Model (JCM) A job redesign approach that seeks to
increase employee motivation Emphasizes internal motivation Redesign work to make it more “interesting”
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JCM (cont’d)
Skill Variety
Task Identity
Task Significance
Autonomy
Feedback
ExperiencedMeaningfulness
of Work
ExperiencedResponsibility for
Outcomes of Work
Knowledge ofActual Results ofWork Activities
High InternalWork Motivation
High-qualityWork Performance
High Satisfactionwith Work
Low Absenteeism& Turnover
Core Job Dimensions
CriticalPsychological
States
Personal & Work
Outcomes
Adapted from Exhibit 11.10
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Job Redesign Techniques
Combining TasksCombining Tasks
Natural Work UnitsNatural Work Units
Establishing ClientRelationships
Establishing ClientRelationships
Vertical LoadingVertical Loading
Opening FeedbackChannels
Opening FeedbackChannels
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What Really Works?Making Jobs More Interesting & Motivating
Task Identity
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success 66%
Probability of success 69%
Task Significance
Job SatisfactionJob Satisfaction
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What Really Works? (cont’d)Making Jobs More Interesting & Motivating
Skill Variety
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success 70%
Probability of success 73%
Autonomy
Job SatisfactionJob Satisfaction
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What Really Works? (cont’d)Making Jobs More Interesting & Motivating
Feedback10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success 70%
Probability of success 84%
High Growth Need Strength
Job SatisfactionJob Satisfaction
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What Really Works? (cont’d)
Making Jobs More Interesting & Motivating
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success 69%
Low Growth Need Strength
Job SatisfactionJob Satisfaction
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What Really Works? (cont’d)Making Jobs More Interesting & Motivating
Task Identity
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success 63%
Probability of success 68%
Task Significance
Workplace AbsenteeismWorkplace Absenteeism
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What Really Works? (cont’d)Making Jobs More Interesting & Motivating
Skill Variety
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success 72%
Probability of success 74%
Autonomy
Workplace AbsenteeismWorkplace Absenteeism
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What Really Works? (cont’d)Making Jobs More Interesting & Motivating
Feedback10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success 72%
84%
Workplace AbsenteeismWorkplace Absenteeism
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After discussing this section, you should be able to:
Learning ObjectivesDesigning Organizational Processes
4. explain the methods that companies are using to redesign internal organizational processes (i.e., intraorganizational processes).
5. describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes).
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Intraorganizational Processes
Reengineering
Empowerment
Behavioral Informality
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Reengineering
The fundamental rethinking and radical redesign of business processes
Intended to achieve dramatic improvements in performance
Change the orientation from vertical to horizontal
Changes task interdependence
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Pooled Interdependence
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Sequential Interdependence
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Reciprocal Interdependence
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Empowerment
A feeling of intrinsic motivation Workers perceive meaning in their work Employees are capable of self-determination Employees are active rather than passive
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Behavioral Informality
Behavioral Informality Spontaneity Casualness Interpersonal familiarity
Behavioral Formality Routine & regimen Specific rules Impersonal attachment
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Interorganizational Processes
ModularModularOrganizationsOrganizations
VirtualVirtualOrganizationsOrganizations
BoundarylessBoundarylessOrganizationsOrganizations
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What Really Happened? Reengineering at Exide Technologies Implemented product structure around global
business units Problems associated with product basis caused a
return to geography structure Exide is still searching for the proper
organizational structure