Designing Adaptative Organizations

Organizing is the deployment of organizational resources to achieve strategic goals.

Organizing the vertical structure

• Organization structure is defined as:
• 1. The set of formal tasks assigned to individuals and departments.
• 2. Formal reporting relationships.
• 3. The design of systems to ensure effective coordination of employees across departments.

Organization chart

• Visual representation
• Set of formal tasks
• Framework for vertical control
• Formal reporting relationship

FEATURES OF VERTICAL STRUCTURE

Work Specialization / Division of Labor

Chain of command

• Line of authority that links all persons in an organization.
• Shows who reports to whom.
• Two underlying principles:
• 1. Unity of command - each employee is held accountable to only one supervisor.
• 2. Scalar Principle - defined line of authority in the organization that includes all employees.

CHAIN OF COMMAND
Authority, Responsibility and Delegation

Authority

• Authority is created in organizational positions, not people.
• Authority flows down the vertical hierarchy.
• Authority is accepted by subordinates.

Responsibility
- Flips side of authority
- Duty to perform the task or activity an employee has been assigned
- Managers are assigned authority adaptaded with responsibility

Accountability

• Mechanism through which authority and responsibility are aligned.
• Require reporting outcomes to those above them in the chain of command.
• Built into the organization structure.

Delegation

• Process managers use to transfer authority and responsibility
• Managers should delegate authority

Line and Staff Authority

• Line authority - people in management positions have formal authority to direct and control immediate subordinates.
• Staff authority - is narrower, and includes the right to advise, recommend, and counsel in the staff specialists´ area of expertise.

Span of management/span of control

• Number of employees who report to a supervisor
• Traditional view-seven subordinates per manager
• Lean organizations today-30-subordinates

tall vs flat structure

• Span of control used in an organization determines whether the structure is tall or flat.
• Tall structure has a narrow span and more levels.
• Flat structure has a wide span and fewer levels.
• The trend has been toward wider spans of control.

Centralization vs. Decentralization

• Centralization means that decision authority is located near the top of the organization.
• Decentralization means decision authority is pushed downward to lower organizational levels.

Centralization vs Decentralization

• Greater change and uncertainty associated with decentralization
• Should fit the firm´s strategy
• In time of crisis, authority may be centralized

DEPARTAMENTALIZATION

1. vertical functional
2. divisional
3. matrix
4. team-based

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Homework:
Read chapter 7
In teams of 2 or 3, select a company and identify the type of structure and justify your answer.