MANAGEMENT

SUMMARY
CHAPTER 11
CONTEMPORARY ORGANIZATIONAL DESIGN

CHAPTER 11
CONTEMPORARY ORGANIZATIONAL DESIGN
CONTEMPORARY ORGANIZATIONAL DESIGNS
Exhibit 11-1
Contemporary
Organizational
Design

What It Is

Advantages

Disadvantages

Team Structure

A structure in which the entire

organization is made up of work
groups or teams

Employees are more

involved and empowered
Reduced barrier among
functional areas

No clear chain of
command
Pressure on teams to
perform

Fluid and flexible design

that can respond to
environmental changes
Faster decision making

Complexity of assigning
people to projects
Task and personality
conflicts

Matrix Project
Structure

Matrix is a structure that assigns

specialists from different functional
areas to work on projects who then
return to their areas when the
project is completed. Project is a
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

limited to artificial horizontal,
vertical, or external boundaries;
includes virtual and network types
of organizations

Highly flexible and

responsive
Utilizes talent wherever
its found

Lack of control
Communication
difficulties

A structure in which employees

continually acquire and share new
knowledge and apply that
knowledge

Sharing knowledge
throughout organization
Sustainable source of
competitive advantage

Reluctance on part of
employees to share
knowledge for fear of
losing their power
Large numbers of
experienced employees
on the verge of retiring

Boundaryless
Structure

Learning
Structure

Team Stuctures

A team structure is one in which the entire organization is made up of work teams that do the
organizations 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 organizations collaboration efforts can be internal (among employees within the organization) or
external (with any stakeholders).
In both types, its important that managers recognize how such collaborative efforts fit with the
organizations structure and the challenges of making all the pieces work together successfully.
Benefits and Drawbacks of Collaborative Work

Benefits
Increased communication and coordination
Greater innovative output
Enhanced ability to address complex
problems
Sharing of information and best practices

Drawbacks
Potential interpersonal conflict
Different views and competing goals
Logistics of coordinating

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 organizations boundaries and allowing
innovations to easily transfer inward and outward

Benefits and Drawbacks of Open Innovation

Benefits
Gives customers what they want a voice
Allows organizations to respond to complex
problems
Nurtures internal and external relationships
Brings focus back to marketplace
Provides way to cope with rising costs and
uncertainties of product development

Drawbacks
High demands of managing the process
Extensive support needed
Cultural challenges
Greater need for flexibility
Crucial changes required in how
knowledge is controlled and shared

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 dont 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 employees 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.
TODAYS 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
organizations network.