Adhocracy: A Closer Look

Prof Jitendra Mohanty School of Management KIIT University Bhubaneswar

As organizations take on increasingly demanding, innovative, and complex activities, they will very likely turn to adhocracy Pure adhocracy an abstraction No pure adhocracy only variants of adhocracy are seen Number of design configurations of adhocracy available

The Matrix Specialists from specific functional departments work in one or more interdisciplinary teams led by project leaders Adds flexibility dimension to bureaucracys economies of specialization Matrix proposes two bosses: functional and project (dual command) goes against bureaucracys unity of command Legitimates lateral channels of influence

When to use Matrix Matrix seen in ad agencies, aerospace firms, R & D labs, hospitals, universities, management consultancies, entertainment companies Essential conditions: (1) environmental pressure from two or three critical sectors ( Ad agency to maintain its technical focus and respond to clients needs) (2) interdependence between departments (3) economies of scale in use of internal resources

Two types of matrix structure Temporary Matrix (Aerospace example): Projects or products undergoing change continuously Permanent Matrix (Large colleges of business): Projects or products relatively enduring Strengths of matrix: facilitates better coordination, better communication and more flexibility reduces bureaupathologies prevents displacement of goals due to departmental members tendency to protect their little worlds

Facilitates efficient allocation of specialists Creates increased ability to respond rapidly to change in the environment Ensures timely project completion Cost control for economic efficiency Development of technical capability for future Increased motivation for professionals through a platform of democratic and scientific norms

Weaknesses of matrix Creates confusion, propensity to foster power struggles, stress it places on individuals Absence of unity of command leads to ambiguity increased ambiguity leads to conflict Project managers fight to get best of specialists power struggle ensues High stress experienced by individuals who seek security and certainty Multiple reporting results in role conflict unclear expectations produce role ambiguity

Theory Z William Ouchi: American version of the Japanese model ( IBM, HP, P & G etc) Theory Y : Adapted to handle high rates of employee turnover creates mechanistic bureaucracy Theory J: To handle low turnover mirrors adhocracy

Theory A

Theory J

ST employment Specialized career paths

Life-time employment Non-specialized career paths

Individual decision making

Individual responsibility Frequent appraisal Explicit, formalized appraisal

Consensual decision making

Collective responsibility Infrequent appraisal Implicit, informal appraisal

Rapid promotion

Slow promotion

Segmented concern Comprehensive for people concern for people

Theory Z: Japanese model adapted to fit into American culture Essentially adhocratic Complexity low excessive layers unnecessary LT loyalty and team works stressed

Theory Z Organizations
LT Employment Moderately specialized career paths Consensual decision making

Individual responsibility
Infrequent appraisal Implicit, informal appraisal with explicit, formalized measures Slow promotion

Comprehensive concern for people

The Collateral Form Allows intrapreneurship creates spirit and rewards of entrepreneurship within or alongside a large bureaucracy Small teams or separate business units with independence and resources to experiment Has flexibility to solve ill-structured problems This is creating adhocracy within bureaucracy The weakness is disorder at times due to meshing bureaucratic structure with organic units often clash of culture results Needs unique type of top management to blend rules, checks and balances and intolerance for failure with risk taking and making mistakes,

The Network Structure A small central organization that relies on other organizations to perform manufacturing, distribution, marketing and other crucial functions on a central basis Nike : an organization of relationships billions of dollars in sales without own manufacturing facilities Allow flexibility to focus on what it does best Managers spend most of their time coordinating and controlling external relations

Good for certain firms requiring high flexibility to respond quickly to fashion changes (toys and apparels firms) Suits firms whose manufacturing needs low-cost labour (outsourcing) Weaknesses: Loss of close control supply less predictable innovations under the direction of another organization can not be guarded

Other Examples of Adhocracy Task Force: Temporary structure formed to accomplish a specific, well-defined and complex task that involves a number of organizational subunits The Committee Form: This form arises when A decision requires broad range of experience and backgrounds All affected by decision need to be represented Desirable to spread the workload During management transition when no single individual is ready to lead organization

Committees may be temporary or permanent Temporary committee same as task force Permanent committees combine diverse inputs of task force plus stability and consistency of matrix Plural executives: committees established at top level of organization helps handle homogeneity of top executives task

The Collegial Form Form of adhocracy fashionable in universities, research labs, highly professional organizations Full democracy in making all important decisions ( vs. representative decision making in task force or committee) Represents the utmost in decentralization (faculty work with minimal guidelines) great deal of leeway for departmental discretion Bell Labs, Eastman Kodak: extremely high employee autonomy minimum formalization collegial decision making Allows highly skilled professionals to adapt rapidly to changing needs of work