Chapter 10 – Organizing & Structural Design
Page 1 – Chapter Introduction
Focus: Organizing / Structural Design with an emphasis on Designing Adaptive Organizations.
Establishes the central tension every organization faces: how to deploy (structure plus human resources) to reach strategic goals.
Page 2 – Chapter Outline
Strategy & Organizing
Core organizing concepts
Types of organizational structure
Organizing for horizontal coordination
Key factors that shape structure
Page 3 – Why Organizing Matters
Organizing ≜ the deliberate deployment of resources to achieve goals.
Every organization continually grapples with structural design / redesign.
Principle: Structure follows strategy & planning.
Page 4 – What an Organizational Structure Defines
Formal tasks assigned to individuals & departments.
Formal reporting relationships (who reports to whom).
Design of systems that secure coordination & integration.
Page 5 – Sample Organization Chart (hierarchical example)
President → two Vice-Presidents (Accounting & Production) → multiple Directors/Managers → Supervisors/Analysts/Clerks.
Illustrates: vertical chain of command, functional departments, spans of control.
Page 6 – Core Organizing Concepts (Vertical vs. Horizontal)
a. Work Specialization (Division of Labor): Degree to which tasks are subdivided into individual jobs.
b. Chain of Command: Unbroken line of authority specifying formal reporting links.
Page 7 – Span of Management (a.k.a. Span of Control)
Number of employees supervised by one manager.
Tall structure: many layers, narrow spans.
Flat structure: few layers, wide spans.
Page 8 – Reorganization & Span of Management
Modern reorgs often flatten layers to gain speed & reduce cost.
Visual cue (copyright slide) underlines trend toward wider spans.
Page 9 – Centralization vs. Decentralization
Centralization: decision authority remains near the top.
Decentralization: authority pushed downward.
Drivers:
• Change & uncertainty → decentralization.
• Strategic fit (alignment with goals).
• Crises → temporary recentralization.
Page 10 – Critical Thinking Prompt
Experts observe a steady shift toward decentralization ⇒ managers must be ready to make more decisions at lower levels, assume accountability, and develop broader skill sets.
Page 11 – Two Classic Structural Forms
Vertical Functional Approach – grouping by skills/activities/resources.
Divisional Approach – grouping by outputs or customers (product, program, geography, customer segment) creating self-contained units.
Page 12 – Functional vs. Divisional Structures (Diagram)
a. Functional: single set of functions (R&D, Manufacturing, etc.) reporting to president.
b. Divisional: each division (Electronics, Biotechnology, Consumer Products) duplicates the functional departments → better focus, but resource duplication.
Page 13 – Matrix & Team Approaches
Matrix: overlays functional & divisional structures; dual authority; enhances information flow & coordination.
Team approach: establishes permanent or temporary cross-functional teams; delegates authority; enhances flexibility & responsiveness.
Page 14 – Dual-Authority in a Matrix (Diagram)
Employees have two bosses: functional VP & Product Manager.
Vertical chain for functions; horizontal chain for product lines.
Page 15 – Global Matrix Structure
Example: Worldwide product groups (Plastics, Glass Fibers, Insulation) intersect with geographic regions (Germany, Latin America, etc.).
Subsidiary managers report along both dimensions.
Page 16 – Network (Virtual) Structure
Extends horizontal coordination via partnerships & alliances.
Firm acts as a hub; sub-contracts major functions to specialized companies (outsourcing).
Highly flexible but demands strong relationship management.
Page 17 – Network Departmentalization Example
Core company + external partners: Legal (UK), Design (Canada), Manufacturing (Thailand & China), Accounting (India), Transportation (USA), Distribution (Germany).
Visualizes global dispersion & reliance on ICT.
Page 18 – Structural Approaches: Advantages vs. Disadvantages
Functional | Divisional | Matrix | Team | Virtual Network |
|---|---|---|---|---|
Efficient, specialization, mgmt control | Fast, customer focus | Coordination, resource sharing | Low barriers, quick decisions | Worldwide expertise, low overhead |
Poor cross-comm, slow response | Duplication, less technical depth | Dual authority conflict | Meeting overload | Weak control, loyalty issues |
Page 19 – Need for Structural Change
Vertical models too rigid for turbulent environments.
Firms pursue integration & coordination, breaking departmental silos to gain agility.
Page 20 – Restructuring Case References
Kenya Airways, American Express, FORD, DELL, HP, TTPOST, WASA, RBC – illustrate real-world restructuring motivations & outcomes.
Page 21 – Key Aspects of Restructuring (1): DOWNSizing
Comic/visual emphasizes human impact; job loss notices.
Page 22 – Downsizing Defined
Intent: reach "right" workforce size to enhance competitiveness.
HR’s dual role: strategic execution & humane management.
Best practice: transparent communication + emotional support.
Page 23 – Negative Effects of Downsizing (Video prompt)
Highlights morale loss, survivor guilt, reputational cost, and potential quality declines.
Page 24 – Downsizing Process
Clarify overall strategy.
Evaluate options & select.
Implement changes.
Address needs of both survivors and leavers.
Commit to growth plans post-downsizing.
Page 25 – Cultural Resistance Comic
Workforce questions whether leadership, not just rank-and-file, will change.
Illustrates politics & trust issues in reorgs.
Page 26 – Downsizing Tactics
Tactic | Characteristics | Typical Actions |
|---|---|---|
Workforce Reduction | Short-term, headcount focus | Attrition, retirements, layoffs |
Organization Redesign | Medium-term, structural | Eliminate layers/functions, merge units, redesign tasks |
Systemic | Long-term, cultural | Reassign responsibilities, promote continuous improvement, normalize downsizing mindset |
Page 27 – Reengineering
Business Process Reengineering (BPR): radical redesign of core processes to secure dramatic gains in cost, quality, service, speed.
Not incremental; seeks step-change improvements.
Page 28 – Evolution Toward Reengineering
Traditional vertical hierarchy.
Cross-functional teams & project managers.
Full horizontal process teams (reengineered state).
Page 29 – Reengineering Process Steps
Rethink work from first principles.
Redesign organization around end-to-end processes instead of functions.
Page 30 – Traits of Reengineered Structures
Functional departments → process teams.
Simple tasks → multidimensional work.
Controlled roles → empowerment.
Hierarchy → flat structure.
Managers shift from supervisors to coaches; executives from scorekeepers to leaders.
Page 31 – Task Forces, Teams & Project Management
Project Manager: coordinates multiple departments on a defined deliverable.
Task Force: temporary, cross-departmental committee tackling a short-term issue.
Cross-functional Team: standing or ad-hoc group drawing membership from across the org to enhance horizontal coordination.
Page 32 – Strategy ↔ Structure Fit
Strategic objectives must drive structure.
Mechanistic (rigid) vs. Organic (flexible) structures suit different environments.
Business performance correlates with how well structure aligns with strategy.
Page 16 – Network (Virtual) Structure
The company links up with outside partners.
The main company acts as a "hub" and hires other companies for big jobs.
It's very flexible but needs good management of these partnerships.
Page 16 – Network (Virtual) Structure
The company links up with outside partners.
The main company acts as a "hub" and hires other companies for big jobs.
It's very flexible but needs good management of these partnerships.