Restructuring Organizations

Contingencies Influencing Structural Design

Environment

Organization Size

Structural Design

Worldwide Operations

Technology

Organization Goals
14-2

Functional Organization

President

VP Research

VP Operations

VP Human Resources

VP Marketing

VP Finance

14-3

The Functional Form

Advantages
O Promotes skill specialization O Reduces duplication of

Disadvantages
Emphasizes routine tasks; encourages short time horizons
Fosters parochial perspectives by managers and limits capacity for top-management positions Multiplies interdepartmental dependencies; increases coordination and scheduling difficulties Obscures accountability for 14-4 overall results

scarce resources and uses resources full time

O Enhances career

development for specialists within large departments

and performance because superiors share expertise with their subordinates others within same specialty

O Facilitates communication

O Exposes specialists to

The Divisional Organization

Chief Executive Officer

Chief Financial Officer

VP Research

Division Manager Asia

Division Manager North America

Division Manager Europe

VP Human Resources

VP Operations

VP Sales and Marketing

14-5

The Divisional Form

Advantages
O Recognizes

Disadvantages
May use skills and resource inefficiently Limits career advancement by specialists Impedes specialists exposure to others within same specialties Puts multiple-role demands upon people and creates stress

interdepartmental interdependencies
O Fosters an orientation

toward overall outcomes and clients

O Allows diversification and

expansion of skills/training
O Ensures accountability by

departmental managers and promotes delegation

O Heightens departmental

cohesion and involvement in work

May promote departmental objectives as opposed to overall organizational goals

14-6

The Matrix Organization

President CEO VP Finance VP Human Resources

Senior VP Programs

Senior VP Operations

VP Research

VP Engineering

VP Manufacturing

VP Marketing

Program Manager Aircraft

Program Manager Navigation Systems

Program Manager Space Systems

14-7

The Matrix Structure

Advantages
O Makes specialized, functional

Disadvantages
Can be difficult to implement

knowledge available to all projects

O Use people flexibly O Maintains consistency by

Increases role ambiguity, stress, and anxiety

Performance is lowered without power balancing between projects and functions Makes inconsistent demands and can promote conflict and short-term crisis orientation

forcing communication between managers

O Recognizes and provides

mechanisms for dealing with legitimate, multiple sources of power

O Can adapt to environmental

May reward political skills over technical skills

14-8

changes

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

14-9

The Process-Based Structure

Senior Management Team Chair and Key Support Process Owners

Developing New Products Process Process Owner Cross Functional Team Members Acquiring and Filling Customer Orders Process Process Owner Cross Functional Team Members Supporting Customer Usage Process Process Owner Cross Functional Team Members
14-10

The Process-Based Form

Advantages
O Focuses resources on O O

Disadvantages
Can threaten middle managers and staff specialists Requires changes in command-and-control mindsets Duplicates scarce resources Requires new skills and knowledge to manage lateral relationships and teams May take longer to make decisions in teams Can be ineffective if wrong processes are identified 1411

O
O O O

customer satisfaction Improves speed and efficiency Adapts to environmental change rapidly Reduces boundaries between departments Increases ability to see total work flow Enhances employee involvement Lowers costs dues to overhead

The Network Organization

Designer Organizations
Broker Organization

Producer Organizations

Supplier Organizations

Distributor Organizations
1412

Types of Networks
Internal Market Network Vertical Market Network Intermarket Network

Opportunity Network

1413

The Network-Based Form

Advantages
O Enables highly flexible and

Disadvantages
Difficulty managing lateral relationships across autonomous organizations Difficulty motivating members to relinquish autonomy to join network Sustaining membership and benefits can be problematic

adaptive responses
O Creates a best of the

best firm to focus resources on customer and market needs leverage a distinctive competency

O Each organization can

O Permits rapid global

response
O Can produce synergistic

May give partners access to proprietary knowledge and technology 1414

results

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

1415

Downsizing Tactics
Tactic
Workforce Reduction

Characteristics
Reduces headcount Short-term focus Fosters transition Changes

Examples
Attrition Retirement/buyout Layoffs Eliminate functions,

Organization organization Redesign Medium-term focus Fosters transition & transformation

Changes culture Long-term focus Fosters

layers, products Merge units Redesign tasks

Change

Systemic

transformation

responsibilities Foster continuous improvement Downsizing is normal

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.

1417

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;

1418

executives change from scorekeepers to leaders