Designing Adaptive

Organization

28 Nov 2014
Chapter 10 (Richard Daft) Management

Organization
What is Organization - A socialunit of
people that isstructuredand managed
to meet collectivegoals.
They have managementstructure that
determinesrelationshipsbetween the
differentactivitiesand members, and
subdivides
andassignsroles,responsibilities,
andauthority to carry out differenttasks.

Organization & Structure

Organizing process leads to the

creation of
What is Organization Structure
Framework
in which the organization
Division
Units are
Resources
of task
coordinated
defines
how deployed

Organizational Structure

Organization Structure is defined as below

Set of
formal
tasks for
Individuals
&
Departmen
ts

Formal Reporting
Relationship
Lines of Authority
Decision
Responsibility
#of hierarchical levels
Span of manager
control

Design of systems to
ensure effective
coordination of
employees

Vertical control, set of formal TASK &

REPORTING

Organizing the Vertical Structure

Feature of Vertical structure
Work
Specializati
on/
Division of
labour

Chain of
command
Authority
Responsibili
ty
Delegation
Line & staff
Authority

Span of
Mgmt/
Control
Number
of staff
reporting
to
superviso
r

Centralizatio
n
(hierarchical
levels where
decisions
made on top)
&
Decentralizat
ion
(decisions
delegated
downwards
to lower org
level

Important definitions
Chain of command continuous line of
authority that links all individuals &
specifies WHO reports to WHOM.
Unity of command each staff is
accountable to one supervisor.
Work specialization/ Division of labour
Degree to which tasks are subdivided into
smaller jobs.
Eg. In a bottling plant, under production,
maintenance supervisor, quality control,
bottling plant superintendent.

Departmentalization & it 5 approaches

Vertical
Function
1

Division
al
Approac
h2

Matrix
Approac
h
3

Team
Approac
h
4

Virtual
Network
Approach
5

Vertical Function Features (Grouping based on similar

skills/expertize)
Information flows Top-down, while of chain of command meets at the
top
Communication compatible within the department due to similar
expertise
Divisional Approach (Grouped based in similar Organizational output)
Whether they produce PRODUCT/ PROGRAM/ SERVICES
Eg. Microsoft has 7 PRODUCT DESIGN, 1. Windows, 2. Sever Software
3. Mobile Software, 4. Office Software, 5. Videogames 6. Business
software 7. MSN internet service
Decisions or problem solving is done at the divisional level & not by
the President/CEO
More aligned to Decentralization
Geographic/ Customer based Division, considers local market,
cultural requirements.

Departmentalization & it 5 approaches

Matrix Approach (Combination of Functional &

Divisional) simultaneously.
Chain of command (DUAL
VERTICAL+HORZONTAL)
Reports to TWO SUPERVISORS simultaneously
Violates UNITY OF COMMAND
Top command must have strong inter-personal
skill to manage functional & matrix managers &
conflicts
Cross
Permanent
Team-based
Team
Approach (Grouping
Functional
Teams in horizontal teams)
structure
chosen
functional staff
that meet as a
team to resolve
problems

Permanent
assigned staff
to resolve
ongoing
problems

Grouped in teams
who directly
interacts with
customers to meet
goals

Departmentalization & it 5 approaches

Virtual Network Approach (Grouped as separate

companies, brokered by small headquarters)
Subcontracts major functions to separate companies
Idea is to outsource activities to expertise companies
and focus themselves on their core competencies.
Eg. Networked computer systems, collaborative
software, internet providers work together as one
unit company.
Eg Music industry, firms like Vivendi, Sony have
alliance with internet service providers, digital
retailers, software firms to bring music to customers.

Features of organizing Horizontal Coordination

To meet the current business requirement, treading to
information based economy, companies are moving
into Horizontal & Decentralizing structure.
Coordination between units/departments is the key
function
Task Forces, teams, Project management
Task force temporary team to solve short-term
problems, involving all departments
Cross functional teams stated in slide 7
Project management responsible to handle a
project which needs coordination among several
departments to complete the project
Reengineering Redesigning of process to bring
radical change in cost, quality, services & speed.

Factors shaping Org Structure

1. Strategy of the business

2. Depends on the Environment
3. Should fit the Technology are of two types
Service technology
Intangible output in service firms
Direct contact with customers, interact directly
to provide purchase & sale. Furniture or fittings
where the stores help in installation at site.
Digital technology that link, customer, suppliers,
partners into organizational network, like emails,
IMs, form virtual teams to resolve problems.