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MANAGEMENT

SUMMARY
CHAPTER 11
CONTEMPORARY ORGANIZATIONAL DESIGN
CHAPTER 11
CONTEMPORARY ORGANIZATIONAL DESIGN

CONTEMPORARY ORGANIZATIONAL DESIGNS


Exhibit 11-1

Contemporary What It Is Advantages Disadvantages


Organizational
Design

A structure in which the entire  Employees are more  No clear chain of


Team Structure organization is made up of work involved and empowered command
groups or teams  Reduced barrier among  Pressure on teams to
functional areas perform

Matrix is a structure that assigns  Fluid and flexible design  Complexity of assigning
specialists from different functional that can respond to people to projects
areas to work on projects who then environmental changes  Task and personality
return to their areas when the  Faster decision making conflicts
Matrix Project project is completed. Project is a
Structure structure in which employees
continuously work on projects. As
one project is completed,
employees move on to the next
project.

A structure that is not defined by or  Highly flexible and  Lack of control


Boundaryless limited to artificial horizontal, responsive  Communication
Structure vertical, or external boundaries;  Utilizes talent wherever difficulties
includes virtual and network types it’s found
of organizations

A structure in which employees  Sharing knowledge  Reluctance on part of


Learning continually acquire and share new throughout organization employees to share
Structure knowledge and apply that  Sustainable source of knowledge for fear of
knowledge competitive advantage losing their power
 Large numbers of
experienced employees
on the verge of retiring

Team Stuctures
 A team structure is one in which the entire organization is made up of work teams that do the
organization’s work
 Employee teams design and do work in the way they think is best, but they also responsible
for all work performance results in their respective areas

Matrix and Project Structures


 Matrix structure assigns specialists from different functional departments to work on projects
being led by a project manager
 Dual chain of command  employees have two managers : functional area manager and
product/project manager
 The matrix design “violates” the unity of command principle, which says that each person
should report to only one boss

The Boundaryless Organization


 Boundaryless organization is an organization whose design is not defined by, or limited to, the
horizontal, vertical, or external boundaries imposed by a predefined structure
 Two type of boundaries :
o Internal  the horizontal ones imposed by work specialization and
departmentalization a vertical ones that separate employees into organizational levels
and hierarchies
o External  the boundaries that separate the organization from its customers,
suppliers, and other stakeholders

 To minimize or eliminate these boundaries, managers might use:


o Virtual organizations
Consists of a small core of full-time employees and outside specialists temporarily
hired as needed to work on projects
o Network organizations
Uses it own employees to do some work activities and networks of outside suppliers to
provide other needed product components or work processes

Learning Organizations
 A learning organizations is an organization that has developed the capacity to continuously
learn, adapt, and change
 In a learning organization, employees continually acquire and share new knowledge and apply
that knowledge in making decisions or doing their work

ORGANIZING FOR COLLABORATION


An organization’s collaboration efforts can be internal (among employees within the organization) or
external (with any stakeholders).
In both types, it’s important that managers recognize how such collaborative efforts “fit” with the
organization’s structure and the challenges of making all the pieces work together successfully.

Benefits and Drawbacks of Collaborative Work


Benefits Drawbacks
 Increased communication and coordination  Potential interpersonal conflict
 Greater innovative output  Different views and competing goals
 Enhanced ability to address complex  Logistics of coordinating
problems
 Sharing of information and best practices

Internal Collaboration
 Cross-functional teams
o Cross functional teams is a work teams composed of individuals from various
functional specialties
o Team members are brought together to collaborate on resolving mutual problems that
affect the respective functional areas
 Task forces / Ad Hoc committee  a temporary committee or team formed to tackle a
specific short-term problem affecting several departments
 Communities of practice  groups of people who share a concern, a set of problems, or a
passion about a topic, and who deepen their knowledge and expertise in that area by
interacting on an ongoing basis

External Collaboration  popular in area of product innovation


 Open Innovation
Opening up the search for new ideas beyond the organization’s boundaries and allowing
innovations to easily transfer inward and outward

Benefits and Drawbacks of Open Innovation


Benefits Drawbacks
Gives customers what they want – a voice High demands of managing the process
Allows organizations to respond to complex Extensive support needed
problems Cultural challenges
Nurtures internal and external relationships Greater need for flexibility
Brings focus back to marketplace Crucial changes required in how
Provides way to cope with rising costs and knowledge is controlled and shared
uncertainties of product development

 Strategic Partnerships
Collaborative relationships between two or more organizations in which they combine their
resources and capabilities for some business purpose
Some reasons why such partnerships make sense:
o Flexibility and informality of arrangements promote efficiencies
o Provide access to new markets and technologies
o Entail less paperwork when creating and disbanding projects
o Risks and expenses are shared by multiple parties
o Independent brand identification is kept and can be exploited
o Working with partners possessing multiple skills can create major synergies
o Rivals can often work together harmoniously
o Partnerships can take on varied forms from simple to complex
o Dozens of participants can be accommodated in partnership arrangements
o Antitrust laws can protect R&D activities

FLEXIBLE WORK ARRANGEMENT


As organizations adapt their structural designs to these new realities, we see more of them adopting
flexible working arrangements. Such arrangements not only exploit the power of technology, but give
organizations the flexibility to deploy employees when and where needed. Some different types of
flexible work arrangements:

 Telecommuting
Work arrangement in which employees work at home and are linked to the workplace by
computer
 Compressed workweek
A workweek where employees work longer hours per day but fewer days per week
 Flextime or flexible work hours
A scheduling system in which employees are required to work a specific number of hours a
week but are free to vary those hours within certain limits
 Job sharing
The practice of having two or more people split a full-time job

CONTINGENT WORKFORCE
 Contingent workforce are temporary, freelance, or contract workers whose employment is
contingent upon demand for their services
 Main issues business face with their contingent workers:
o Classifying who actually qualifies as one, because companies don’t have to pay Social
Security, Medicare, or unemployment insurance taxes on workers classified as
independent
o The process for recruiting, screening, and placing these contingent workers where
their work skills and efforts are needed, so the right people are in the right places at
the right times in order to get work done efficiently and effectively
o The importance of a contingent employee’s performance. It is important that
mechanisms be in place to monitor work performance and goal achievement,
especially if the contingent employee is working off-site.

TODAY’S ORGANIZATIONAL DESIGN CHALLENGES


 Keeping Employees Connected
A major structural design challenge for managers is finding a way to offer flexibility but also
keeping widely dispersed and mobile employees connected to the organization.

 Managing Global Structural Issues


No matter what structural design managers choose for their organizations, the design should
help employees do their work in the best – most efficient and effective – way they can The
structure should support and facilitate organizational members as they carry out the
organization’s network.

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