Management: Richard L. Daft

MANAGEMENT
RICHARD L. DAFT
Designing Adaptive
Organizations
CHAPTER 9
chapter9 Learning Outcomes
• Discuss the fundamental characteristics of organizing, including such
concepts as work specialization, chain of command, span of
management, and centralization versus decentralization.
• Describe functional and divisional approaches to structure.
• Explain the matrix approach to structure and its application to both
domestic and international organizations.
• Describe the contemporary team and virtual network structures and why
they are being adopted by organizations.
• Explain why organizations need coordination across departments and
hierarchical levels, and describe mechanisms for achieving coordination.
• Identify how structure can be used to achieve an organization’s strategic
goals.
3
Copyright ©2010 by South-Western, a division of Cengage
Learning. All rights reserved.
What are Your
chapter9
Leadership Beliefs?
• Personal beliefs about the role of leadership
impact a new manager
• A manager’s work is influenced by how the
organization is organized
• Organizational systems should be compatible
with leadership beliefs
• Good managers understand and learn to work
within a variety of structural configurations
4
chapter9 Organizing
• Organizing follows from strategy

– Strategy dictates what you do
– Organization dictates how you do it
• Organizing is the deployment of

organizational resources to achieve
strategic goals
5
Organizing The
chapter9
Vertical Structure
1) The set of formal tasks assigned to
individuals and departments
2) Formal reporting relationships, including
lines of authority, decision responsibility,
number of levels and span of control
3) The design of systems to ensure
effective coordination of employees
across departments
6
chapter9 Organizing Concepts
• Work Specialization – the division tasks

into individual jobs called division of labor
• Chain of Command – a line of authority

that links individuals and direct reports
7
Authority, Responsibility,
chapter9
and Delegation
• The chain of command illustrates authority
• Authority is the formal and legitimate right to
make decisions and issues orders
– Authority is vested in organizational positions, not
people
– Authority is accepted by subordinates
– Authority flows down the vertical hierarchy
• Responsibility is the duty to perform the task or
activity assigned
• Delegation is the process managers use to
transfer authority and responsibility to others 8
chapter9 Line and Staff Authority
• Line departments perform the tasks that

reflect the organization’s primary goals
– They work directly with customers/products
• Staff departments are those departments

that provide specialized skills in support of
line departments
– Legal, Human Resources, Marketing
9
Organizing Chart for a
chapter9
Water Bottling Plant
10
chapter9 Span of Management
• The number of employees reporting to a
supervisor is span of management
• Factors associated with less supervisor
involvement and larger span of control
 Work is stable and routine
 Subordinates perform similar work
 Subordinates in single location
 Highly trained and need little direction
 Rules and procedures are defined
 Support systems and personnel are available to manager
 Little supervision is required
 Managers’ personal preference favor a large span
11
Reorganization to Increase
chapter9
Span of Management
12
Centralization and
chapter9
Decentralization
Decentralization means
decision authority is
pushed downward to lower
Centralization means that organizational levels
decision authority
is located near the
top of the organization
• Change and uncertainty are usually associated with decentralization

• The amount of centralization or decentralization should fit the firm’s strategy
• During crisis or risk of company failure, authority may be centralized
13
chapter9 Departmentalization
• Basis for grouping positions into departments
• Choices regarding chain of command
• Five traditional approaches:
– Functional
– Divisional
– Matrix
• Innovative approaches:
– Teams
– Virtual Networks
14
Approaches to
chapter9
Structural Design
15
Approaches to
chapter9
Structural Design
16
Vertical Functional
chapter9
Approach
• Grouping into departments based on skills,
expertise, work activities and resource use
• Departmentalized by organizational
resources
– Accounting
– Human resources
– Engineering
– Manufacturing
17
chapter9 Divisional Approach
• Departments are grouped based on outputs

– Product structure, program structure, self-contained
unit structure
• Many large corporations have multiple

divisions for different business lines
• Organizations may assign division responsibility
by geographic region or customer group
18
Functional Versus
chapter9
Divisional Approach
19
Geographic-Based Global
chapter9
Organization Structure
20
chapter9 Matrix Approach
• Combines aspects of both functional and

divisional structures simultaneously
• Improves coordination and information
sharing
• A key challenge is the dual lines of
authority
– Employees report to two supervisors
21
Dual-Authority Structure in
chapter9
a Matrix Organization
22
chapter9 Global Matrix Structure
23
chapter9 Team Approach
• Teamwork is a growing trend

• Teams allow organizations to delegate
authority
• Become flexible and competitive in global
environment
• Organizations may use cross-functional
and/or permanent team strategies
24
The Virtual Network
chapter9
Approach
• Extending the boundaries of collaboration
beyond the organization
– Subcontracting functions to other companies
– Coordinate activities
• Interconnected groups of companies

– partnerships and collaborations
25
Network Approach to
chapter9
Departmentalization
26
Structural Advantages and
chapter9
Disadvantages
27
chapter9 The Need for Coordination
Organizations grow and evolve
Organizations need systems to process

information and enable communication
Coordination is the quality of

collaboration across departments
Coordination is required, regardless of

the structure
28
Evolution of Organization
chapter9
Structures
29
Task Forces, Teams, and
chapter9
Project Management
Project Managers are

responsible for Task Force
coordinating A temporary team or
the activities of committee formed to
several departments on solve a specific
a full-time basis for short-term
the completion problem
of a specific project
30
Examples of Project
chapter9
Manager Relationships
31
chapter9 Reengineering
• Reengineering or business process

reengineering
• Radical redesign of business processes to
achieve dramatic improvements
– Cost
– Quality
– Service
– Speed
32
Reengineering at Michigan
chapter9
Casting Center
33
chapter9 Structure Follows Strategy
The right structure is designed to fit the

organization’s strategy
34

Management: Richard L. Daft

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Management: Richard L. Daft

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MANAGEMENT

• Organizing follows from strategy

• Organizing is the deployment of

• Work Specialization – the division tasks

• Chain of Command – a line of authority

• Line departments perform the tasks that

• Staff departments are those departments

• Change and uncertainty are usually associated with decentralization

• Departments are grouped based on outputs

• Many large corporations have multiple

• Combines aspects of both functional and

• Teamwork is a growing trend

• Interconnected groups of companies

Organizations grow and evolve

Organizations need systems to process

Coordination is the quality of

Coordination is required, regardless of

Project Managers are

• Reengineering or business process

The right structure is designed to fit the

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