ADAPTING

ORGANIZATIONS TO
TODAYS MARKETS

By: Dr. Robina Yasmin

Structuring an Organization
Comprises:

Division of Labor

Team Tasks

Accountability

Assigning Responsibility/
Authority

Allocating
Resources

Establishing
Procedures

8-2

Fayols Principles
of Organization
Unity of Command Degree of
Hierarchy of
Centralization
Authority
Clear
Division of Labor
Communication
Channels
Subordination of
Individual Interest Order
to the General
Equity
Interest
Esprit de Corps
Authority

8-3

Webers
Organizational Principles
Job Descriptions
Written Rules
Procedures, Regulations,
Policies
Staffing/Promotions
Based on Qualifications

8-4

Centralization

(No Delegation)

Advantages

Greater TopManagement
Control
More Efficiency
Simpler Distribution
System
Stronger
Brand/Corporate
Image

Disadvantages

Less
Responsiveness to
Customers
Less
Empowerment
Interorganizational
Conflict
Lower Morale Away
from Headquarters
8-5

Decentralization

(Delegate Authority)

Advantages

Better Adaptation to
Customer Wants
More Empowerment
of Workers
Faster Decision
Making
Higher Morale

Disadvantages

Less Efficiency
Complex Distribution System
Less Top-Management Control
Weakened Corporate Image

8-6

Organizational Structures
Tall Organizations
Many Layers of
Management
High Cost of
Management
Narrow Span of
Control

Flat Organizations

Current Trend
Creation of Teams
Broad Span of
Control

8-7

How to Make Jobs

Fit Your Company (Part 1 of 2)
Each manager must ask:
What resources do I control to accomplish
my tasks?
What measures will be used to evaluate
my performance?
Who do I need to interact with and
influence to achieve my goals?
How much support can I expect when I
reach out to others for help?
Source: HBS Working Knowledge, October
31,2005

8-8

How to Make Jobs

Fit Your Company (Part 2 of 2)

Four Basic Spans of a Job:

The
The
The
The

Span
Span
Span
Span

Source: HBS Working Knowledge, October

31,2005

of
of
of
of

Control
Accountability
Influence
Support

8-9

Span of Control - Narrow

Advantages

More Control by
Top Management
More Chances for
Advancement
Greater
Specialization
Closer
Supervision

Disadvantages

Less Empowerment
Higher Costs
Delayed Decision Making
Less Responsiveness to Customers

8-10

Span of Control - Broad

Advantages

Reduced Costs
More
Responsiveness
to Customers
Faster Decision
Making
More
Empowerment

Disadvantages

Fewer Chances for Advancement

Overworked Managers
Loss of Control
Less Management Expertise

8-11

8-12

Departmentalization
by Function

Advantages

Skill Development
Economies of
Scale
Good Coordination

Disadvantages
Lack of
Communication
Employees
Identify with
Department
Slow Response to
External Demands
Narrow
Specialists
Groupthink

Departmentalization

By Product

By Function
By Customer
Group
By
Geographic
Location
By Process

8-13

Line Organizations
Advantages

Clear Authority
& Responsibility
Easy to
Understand
One Supervisor
Per Employee

Disadvantages

Inflexible
Few Specialists
for Advice
Long Line of
Communication
Difficult to Handle
Complex
Decisions
8-14

8-15

Line/Staff Organizations
Line Personnel

Staff Personnel

Formal Authority

Make Policy
Decisions

Advise Line
Personnel

Assist Line
Personnel

8-16

8-17

Matrix Organizations
Advantages

Disadvantages

Flexibility

Costly/Complex

Cooperation &
Teamwork

Confusion in
Loyalty

Creativity

More Efficient Use

of Resources

Requires Good
Interpersonal
Skills &
Cooperation

Not Permanent
8-18

8-19

A Virtual Corporation
Accounting
Firm

Productio
n Firm

Distributio
n Firm

Core
Firm
Legal
Firm

Advertisin
g Agency

Design
Firm
8-20

Adapting to Change

Restructuring for Empowerment

Focusing on the Customer

Creating a Change-Oriented
Organizational Culture

The Informal Organization

8-21