Adobe Systems BPH_AMBE – fall 2020 Organizing Lecture 5 > Adobe Systems BPH_AMBE – fall 2020 2 Agenda for today §Organizational structures §Organizational design §Contingency factors §Types of org. structures > Adobe Systems BPH_AMBE – fall 2020 3 Where are we? > Organizing and organizational structures Purposes of organizing •Assigns tasks and responsibilities associated with individual jobs. •Divides work to be done into specific jobs and departments. •Coordinates diverse organizational tasks. •Clusters jobs into units. •Establishes relationships among individuals, groups, and departments. •Establishes formal lines of authority. •Allocates and deploys organizational resources. • Organizational Structure = the formal arrangement of jobs within an organization. BPH_AMBE – fall 2020 > Organizational design A process involving decisions about six key elements: •Work specialization •Departmentalization •Chain of command •Span of control •Centralization and decentralization •Formalization BPH_AMBE – fall 2020 > Work specialization = The degree to which tasks in the organization are divided into separate jobs with each step completed by a different person. => creating jobs Overspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover. BPH_AMBE – fall 2020 > Adobe Systems BPH_AMBE – fall 2020 Departmentalization defined Departmentalization Types of deartmentalization ̶ = grouping jobs into departments => creating departments ̶ ̶ ̶ Functional ̶by functions performed Product ̶by product line Geographical ̶on the basis of territory or geography Process ̶on the basis of product or customer flow ̶Customer ̶by type of customer and needs ̶ ̶ ̶ Functional Departmentalization BPH_AMBE – fall 2020 Advantages •Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations •Coordination within functional area •In-depth specialization Disadvantages •Poor communication across functional areas •Limited view of organizational goals Geographical Departmentalization BPH_AMBE – fall 2020 Advantages •More effective and efficient handling of specific regional issues that arise •Serve needs of unique geographic markets better Disadvantages •Duplication of functions •Can feel isolated from other organizational areas Product Departmentalization BPH_AMBE – fall 2020 Advantages •Allows specialization in particular products and services •Managers can become experts in their industry •Closer to customers Disadvantages •Duplication of functions •Limited view of organizational goals Process Departmentalization BPH_AMBE – fall 2020 Advantages •More efficient flow of work activities Disadvantages •Can only be used with certain types of products Customer Departmentalization BPH_AMBE – fall 2020 Advantages •Customers’ needs and problems can be met by specialists Disadvantages •Duplication of functions •Limited view of organizational goals Chain of Command The continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to who. Authority The rights inherent in a managerial position to tell people what to do and to expect them to do it. Responsibility The obligation or expectation to perform. Unity of Command The concept that a person should have one boss and should report only to that person. BPH_AMBE – fall 2020 > Span of Control = the number of employees (who can be effectively and efficiently) directly supervised by a manager. Width of span is affected by: Skills and abilities of the manager Employee characteristics Characteristics of the work being done Similarity of tasks Complexity of tasks Physical proximity of subordinates Standardization of tasks BPH_AMBE – fall 2020 Centralization vs. Decentralization Level (amount of) centralization = degree to which decision-making is concentrated at a single point in the organizations. Centralized organizations = top managers make all decisions, lower level staff just carries them out. Factors supporting more centralization: •Environment is stable. •Lower-level managers are not as capable or experienced at making decisions as upper-level managers. •Lower-level managers do not want to have a say in decisions. •Decisions are relatively minor. •Organization is facing a crisis or the risk of company failure. •Company is large. •Effective implementation of company strategies depends on managers retaining say over what happens. Decentralized organizations = decision making pushed to lower levels (authority delegated) Factors supporting more centralization: •Environment is complex, uncertain. •Lower-level managers are capable and experienced at making decisions. •Lower-level managers want a voice in decisions. •Decisions are significant. •Corporate culture is open to allowing managers to have a say in what happens. •Company is geographically dispersed. •Effective implementation of company strategies depends on managers having involvement and flexibility to make decisions. Employee Empowerment Increasing the decision-making authority (power) of employees. > Formalization = the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures. §Highly formalized jobs offer little discretion over what is to be done. §Low formalization means fewer constraints on how employees do their work. BPH_AMBE – fall 2020 > Mechanistic vs. Organic organization BPH_AMBE – fall 2020 • High specialization • Rigid departmentalization • Clear chain of command • Narrow spans of control • Centralization • High formalization • Cross-functional teams • Cross-hierarchical teams • Free flow of information • Wide spans of control • Decentralization • Low formalization Contingency Factors Structural decisions are influenced by: Overall strategy: Organizational structure always follows strategy. Achievement of strategic goals is facilitated by changes in organizational structure that accommodate and support change. Size of the organization Firms change from organic to mechanistic organizations as they grow in size =>increasing specialization, departmentalization, centralization, and rules and regulations. Technology: Firms adapt their structure to the technology they use. Routine technology = mechanistic organizations Non-routine technology = organic organizations Degree of environmental uncertainty Dynamic environments require organic structures; mechanistic structures need stable environments. BPH_AMBE – fall 2020 Adobe Systems Simple structure Low departmentalization, wide spans of control, centralized authority, little formalization Functional structure Departmentalization by function (operations, finance, human resources, and product research and development) Divisional structure Composed of separate business units or divisions with limited autonomy under the coordination and control the parent corporation. BPH_AMBE – fall 2020 Traditional Organizational Designs > Adobe Systems Team structures The entire organization is made up of work groups or self-managed teams of empowered employees. Matrix and project structures Specialists from different functional departments are assigned to work on projects led by project managers. Matrix and project participants have two managers (dual chain of command) In project structures, employees work continuously on projects; moving on to another project as each project is completed. BPH_AMBE – fall 2020 Contemporary Organizational Designs > Matrix Organization (Example) BPH_AMBE – fall 2020 Adobe Systems organizing organizational structure organizational design work specialization departmentalization functional departmentalization product departmentalization geographical departmentalization process departmentalization customer departmentalization chain of command authority matrix structure project structure organizational chart BPH_AMBE – fall 2020 Terms to Know responsibility unity of command span of control centralization decentralization employee empowerment formalization mechanistic organization organic organization unit production mass production process production simple structure functional structure divisional structure team structure ̶