Restructuring Organizations

Contingencies Influencing
Structural Design
Environment

Organization Worldwide
Size Structural Operations
Design

Organization
Technology Goals
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2
Functional Organization

P r e s id e n t

V P R e s e a rc h V P O p e r a tio n s VP Hum an V P M a r k e tin g V P F in a n c e

R e s o u rc e s

14-3
 The Functional Form
Advantages Disadvantages
O Promotes skill Emphasizes routine tasks;
specialization encourages short time horizons
O Reduces duplication of
scarce resources and uses Fosters parochial perspectives
resources full time by managers and limits
O Enhances career capacity for top-management
development for specialists positions
within large departments
O Facilitates communication Multiplies interdepartmental
and performance because dependencies; increases
superiors share expertise
with their subordinates coordination and scheduling
O Exposes specialists to
difficulties
others within same Obscures accountability14-
specialty for
overall results 4
 The Divisional
Organization
C h ie f E x e c u tiv e
O ffic e r

C h ie f F in a n c ia l V P R e s e a rc h
O ffic e r

D iv is io n M a n a g e r D iv is io n M a n a g e r D iv is io n M a n a g e r
A s ia N o r th A m e r ic a E u ro p e

VP Hum an V P O p e r a tio n s V P S a le s a n d
R e so u rc e s M a r k e tin g

14-5
 The Divisional Form
Advantages Disadvantages
O Recognizes May use skills and resource
interdepartmental inefficiently
interdependencies
O Fosters an orientation
Limits career advancement by
toward overall outcomes specialists
and clients Impedes specialists exposure
O Allows diversification and to others within same
expansion of specialties
skills/training
Puts multiple-role demands
O Ensures accountability by
departmental managers upon people and creates stress
and promotes delegation May promote departmental
O Heightens departmental objectives as opposed to
cohesion and overall organizational goals
involvement in work 14-
6
 The Matrix
Organization
P r e s id e n t
CEO

V P F in a n c e V P H u m a n R e s o u rc e s

S e n io r V P S e n io r V P
P ro g ra m s O p e r a tio n s

V P R e se a rc h V P E n g in e e rin g V P M a n u fa c tu r in g V P M a r k e tin g

P ro g ra m M a n a g e r
A ir c r a ft

P ro g ra m M a n a g e r
N a v ig a tio n S y s te m s

P ro g ra m M a n a g e r
S p a c e S y s te m s

14-7
 The Matrix Structure
Advantages Disadvantages
O Makes specialized, Can be difficult to implement
functional knowledge Increases role ambiguity,
available to all projects stress, and anxiety
O Use people flexibly Performance is lowered
O Maintains consistency by without power balancing
forcing communication between projects and
between managers functions
O Recognizes and provides
Makes inconsistent demands
and can promote conflict and
mechanisms for dealing short-term crisis orientation
with legitimate, multiple
sources of power May reward political skills
over technical skills
O Can adapt to
environmental changes 14-
8
 Characteristics of
Process-Based Structures
Processes drive structure
Work adds value
Teams are fundamental
Customers define performance
Teams are rewarded for performance
Teams are tightly linked to suppliers and
customers
Team members are well informed and trained

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The Process-Based
Structure
S e n io r M a n a g e m e n t T e a m
C h a ir a n d K e y S u p p o r t P r o c e s s O w n e r s

D e v e lo p in g N e w P r o d u c ts P r o c e s s
P ro c e s s O w n e r
C r o s s F u n c t io n a l T e a m M e m b e r s

A c q u ir in g a n d F illin g C u s to m e r O r d e r s P r o c e s s
P ro c e s s O w n e r
C r o s s F u n c t io n a l T e a m M e m b e r s

S u p p o r tin g C u s to m e r U s a g e P r o c e s s
P ro c e s s O w n e r
C r o s s F u n c t io n a l T e a m M e m b e r s

14-10
 The Process-Based Form
Advantages Disadvantages
O Focuses resources on Can threaten middle managers
customer satisfaction and staff specialists
O Improves speed and Requires changes in
efficiency command-and-control
O Adapts to environmental mindsets
change rapidly
Duplicates scarce resources
O Reduces boundaries
between departments Requires new skills and
O Increases ability to see knowledge to manage lateral
total work flow relationships and teams
O Enhances employee May take longer to make
involvement decisions in teams
O Lowers costs dues to Can be ineffective if wrong
overhead processes are identified 14-
11
 The Network
Organization
Designer Producer
Organizations Organizations

Broker
Organization

Supplier Distributor
Organizations Organizations
14-
12
 Types of Networks
Internal Market Network

Vertical Market Network

Intermarket Network

Opportunity Network

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13
 The Network-Based Form
Advantages Disadvantages
O Enables highly flexible Difficulty managing lateral
and adaptive responses relationships across
O Creates a best of the autonomous organizations
best firm to focus
resources on customer Difficulty motivating
and market needs members to relinquish
O Each organization can
autonomy to join network
leverage a distinctive Sustaining membership and
competency benefits can be problematic
O Permits rapid global
response
May give partners access to
proprietary knowledge and
O Can produce
technology
synergistic results 14-
14
The Downsizing Process

O Clarify the organizations strategy

O Assess downsizing options and make
relevant choices
O Implement the changes
O Address the needs of survivors and
those who leave
O Follow through with growth plans

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15
Downsizing Tactics

14-16
 The Reengineering
Process
O Prepare the organization
O Specify the organizations strategy
and objectives
O Fundamentally rethink the way work
gets done
O Identify and analyze core business processes
O Define performance objectives
O Design new processes

O Restructure the organization around

the new business processes. 14-
17
 Characteristics of
Reengineered Organizations
Work units change from functional departments to
process teams
Jobs change from simple tasks to multidimensional
work
Peoples roles change from controlled to empowered
The focus of performance measures and
compensation shifts from activities to results.
Organization structures change from hierarchical to
flat
Managers change from supervisors to coaches;
executives change from scorekeepers to leaders
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