O. Dev. ch14

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Organization Development and Change

Thomas G. Cummings

Christopher G. Worley

Chapter Fourteen:

Restructuring Organizations

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Cummings & Worley, 8e(c)2005 Thomson/South-Western

14-2

Learning Objectives

for Chapter Fourteen

To understand the basic principles of

technostructural design To understand the three basic structural

choices and two advanced structural choices

available to organizations

To understand the process of downsizing

and reengineering

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14-3

Contingencies Influencing

Structural DesignEnvironment

OrganizationSize

Technology

Organization

Goals

WorldwideOperationsStructural

Design

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14-4

Functional Organization

VP Research VP Operations VP Human

Resources

VP Marketing VP Finance

President

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14-5

The Functional Form

Promotes skill specialization

Reduces duplication of scarceresources and uses resources

full time

Enhances career developmentfor specialists within largedepartments

Facilitates communication and

performance because superiorsshare expertise with theirsubordinates

Exposes specialists to otherswithin same specialty

Emphasizes routine tasks;encourages short time horizons

Fosters parochial perspectivesby managers and limitscapacity for top-management

positions

Multiplies interdepartmental

dependencies; increasescoordination and schedulingdifficulties

Obscures accountability foroverall results

Advantages Disadvantages

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14-6

The Divisional Organization

Ch ef F nanc alff ce

VP Resea ch

D v s on Manage

As a

VP Hu an

Resou ces

VP pe a ons VP Sales and

Ma ke ng

D v s on Manage

No h A e ca

D v s on Manage

Eu ope

Ch ef Execu ve

ff ce

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14-7

The Divisional Form

Recognizes interdepartmentalinterdependencies

Fosters an orientation towardoverall outcomes and clients

Allows diversification andexpansion of skills/training

Ensures accountability bydepartmental managers and

promotes delegation Heightens departmental

cohesion and involvement inwork

Advantages May use skills and resource

inefficiently

Limits career advancement byspecialists

Impedes specialists exposureto others within samespecialties

Puts multiple-role demands

upon people and creates stress May promote departmental

objectives as opposed tooverall organizational goals

Disadvantages

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14-8

VP F nance VP Hu an Resou ces

P og a Manage

A c af

P og a ManageNav ga on Sys e s

P og a Manage

Space Sys e s

Sen o VP

P og a s

VP Resea ch VP Eng nee ng VP Manufac u ng VP Ma ke ng

Sen o VP

pe a ons

P es den

CE

The Matrix Organization

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14-9

The Matrix Structure

Makes specialized, functionalknowledge available to all

projects

Use people flexibly

Maintains consistency byforcing communication

between managers

Recognizes and providesmechanisms for dealing with

legitimate, multiple sources ofpower

Can adapt to environmentalchanges

Advantages Can be difficult to implement

Increases role ambiguity,stress, and anxiety

Performance is lowered

without power balancingbetween projects andfunctions

Makes inconsistent demandsand can promote conflict andshort-term crisis orientation

May reward political skillsover technical skills

Disadvantages

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14-10

Characteristics of

Process-Based Structuresy Processes drive structure

y Work adds value

y Teams are fundamental

y Customers define performance

y Teams are rewarded for performance

y Teams are tightly linked to suppliers andcustomers

y Team members are well informed and trained

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14-11

The Process-Based Structure

Devel ew Products ProcessProcess Owner

Cross Functional Team Members

Acquiring and Filling ustomer Orders Process

Process Owner


Supporting ustomer Usage Process

Process Owner


Senior Management Team

Chair and Key Support Process Owners

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14-12

The Process-Based Form

Focuses resources oncustomer satisfaction

Improves speed and efficiency

Adapts to environmentalchange rapidly

Reduces boundaries betweendepartments

Increases ability to see totalwork flow

Enhances employeeinvolvement

Lowers costs dues to overhead

Can threaten middle managersand staff specialists

Requires changes incommand-and-controlmindsets

Duplicates scarce resources

Requires new skills andknowledge to manage lateralrelationships and teams

May take longer to makedecisions in teams

Can be ineffective if wrongprocesses are identified


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Cummings & Worley, 8e(c)2005 Thomson/South-Western 14-13

The Network OrganizationDesigner

Organizations

Supplier

Organizations

Broker

Organization

Producer

Organizations

Distributor

Organizations

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Types of Networksy Internal Market Network

y

Vertical Market Networky Intermarket Network

y Opportunity Network

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The Network-Based Form

Enables highly flexible andadaptive responses

Creates a best of the best

firm to focus resources oncustomer and market needs

Each organization canleverage a distinctivecompetency

Permits rapid globalresponse

Can produce synergisticresults

Difficulty managing lateral

relationships across

autonomous organizations

Difficulty motivatingmembers to relinquish

autonomy to join network

Sustaining membership and

benefits can be problematic

May give partners access to

proprietary knowledge and

technology


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The Downsizing Process

Clarify the organizations strategy

Assess downsizing options and make

relevant choices

Implement the changes

Address the needs of survivors and those

who leave

Follow through with growth plans

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Downsizing Tactics

Tactic a act istics E a s

Wor orcee uction

yReduces headcountyShort-term focusyFosters transition

yAttritionyRetirement/buyoutyLayoffs

OrganizationRedesign

yChangesorganization

yMedium-term focusyFosters transition &

transformation

yEliminate functions,layers, products

yMerge unitsyRedesign tasks

Systemic

yChanges cultureyLong-term focusyFosters

transformation

yChangeresponsibilities

yFoster continuousimprovement

yDownsizing is normal

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The Reengineering Process

Prepare the organization

Specify the organizations strategy and

objectives

Fundamentally rethink the way work gets done Identify and analyze core business processes

Define performance objectives

Design new processes Restructure the organization around the new

business processes.

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Characteristics of

Reengineered Organizationsy Work units change from functional departments to process

teams

y

Jobs change from simple tasks to multidimensional worky Peoples roles change from controlled to empowered

y The focus of performance measures and compensationshifts from activities to results.

y Organization structures change from hierarchical to flat

y Managers change from supervisors to coaches; executiveschange from scorekeepers to leaders

Documents

O. Dev. ch14