O. Dev. ch14
Transcript of 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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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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Contingencies Influencing
Structural DesignEnvironment
OrganizationSize
Technology
Organization
Goals
WorldwideOperationsStructural
Design
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Functional Organization
VP Research VP Operations VP Human
Resources
VP Marketing VP Finance
President
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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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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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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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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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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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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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The Process-Based Structure
Devel ew Products ProcessProcess Owner
Cross Functional Team Members
Acquiring and Filling ustomer Orders Process
Process Owner
Cross Functional Team Members
Supporting ustomer Usage Process
Process Owner
Cross Functional Team Members
Senior Management Team
Chair and Key Support Process Owners
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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
Advantages Disadvantages
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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
Advantages Disadvantages
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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