Chapter 11 Contemporary Organizational Design

Chapter 11.1
Six Building Blocks on Organizations Structure

Work specialization
Departmentalization
Formalization

Chain of Command
Span of Control
Centralization and
Decentralization

Contemporary Organizational Design

A. Team Structure

A structure in which the entire organization is made up of work

groups or teams.

In large organizations, the team structure complements what is

typically a functional or divisional structure and allows the organization to
have the efficiency of a bureaucracy and the flexibility that teams provide.
Advantages: Employees are more involved and empowered.

Reduced barriers among functional areas

Disadvantages: No clear chain of command

Pressure on teams to perform

B. Matrix-Project Structure
Matrix

- A structure that assigns specialists from different functional areas to

work on projects who then return to their areas when the project is
completed.

- Creates a dual chain of command

TWO MANAGERS IN MATRIX STRUCTURE:
1. Functional Area Manager decides about promotions, salary,
recommendations and annual reviews.
2. Product or Project Manager has authority over the functional members who
are part of his/her project teams in areas related to the projects goals.

These two managers share authority, coordinate with the work of

employees, and resolve conflicts together.

Project

- A structure in which employees continuously work on projects.

-Employees has no formal departments to return after the completion

of a project

-All work performed by teams of employees

- Tend to be more flexible organizational design, eliminating the

departmentalization or rigid organizational hierarchy that can slow down
making decisions or taking action.


- Managers serve as facilitators, mentors and coaches. They are
responsible in minimizing organizational obstacles and ensuring teams have
the resources they need to complete their work in an effective and efficient
manner.
Advantages: Fluid and Flexible design that can respond to environmental
changes - faster decision making
Disadvantages: Complexity of assigning people to projects - task &
personality conflicts.
C. Boundaryless Structure
A structure that is not defined by or limited to artificial horizontal, vertical,
or external boundaries imposed by a predefined structure.
TWO TYPES OF BOUNDARIES
1. Internal the horizontal ones imposed by work specialization and
departmentalization and the vertical ones that separate employees into
organizational levels and hierarchies.
2. External separates the organization from its customers, suppliers, and
other stakeholders.
WAYS THAT MANAGERS MIGHT USE TO ELIMINATE BOUNDARIES
1. Virtual organization consists of a small core of full time employees and
outside specialists temporarily tired as needed to work on projects. By relying
on these virtual employees, the company enjoys a network of talent without
all the unnecessary overhead and structural complexity.
2. Network organization uses its own employees to do some work activities
and networks of outside supplies to provide other needed product
components or work processes.

Advantages: Highly flexible and responsive

Utilizes talent wherever its found

Disadvantages: Lack of control

Communication Difficulties
D. Learning Structure

A structure in which employees continually acquire and share new

knowledge and apply that knowledge in making decision or doing their work.

Employees throughout the entire organization continuously acquire,

share, and apply new knowledge in making decisions or doing their work and
they must share information and collaborate on work activities - requires
minimal structural and physical barriers, which allows employees to work
together in doing the organizations work the best way they can and , in the
process, learn from each other.

Because of employees little need for bosses to direct and control,

managers serve as facilitators, supporters and advocates.
Advantages: Sharing of knowledge throughout organization

Sustainable source of competitive advantage

Disadvantages: Reluctance on part of employees to share knowledge for
fear of losing their power.


Large numbers of experienced employees on the verge of
retiring.

Chapter 11.2
Many organizations are encouraging collaborative work among
employees. Organizations collaboration efforts can be internal that is,
among employees within the organization. Or those efforts can be
external collaboration with any stakeholders.

1.
2.
3.
4.

1.
2.
3.

1.

2.

Benefits of Working Collaboratively

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

Drawbacks of Working Collaboratively

Potential interpersonal conflict
Different views and competing goals
Logistics of coordinating

Types of Collaboration
Internal Collaboration when managers believe that collaboration among
employees is needed for more coordinated and integrated work efforts.
Cross-Functional Team a work team composed of individuals from
various functional specialties.
Task Force (or 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
Open Innovation opening up the search for new ideas beyond the
organizations boundaries and allowing innovations to easily transfer
inward and outward.
Strategic Partnership collaborative relationships between two or
more organizations in which they combine their resources and
capabilities for some business purpose.

Chapter 11.3

FLEXIBLE WORK ARRANGEMENTS

Telecommuting - a work arrangement in which employees work at home

and are linked to the workplace by computer.

Working from home used to be considered a "cushy perk" for a few

lucky employees and such an arrangement wasn't allowed very often.

Many managers are reluctant to have their employees become "laptop

hobos", that employees will waste time surfing the Internet or playing
online games instead of working and ignore their clients, and that theyll
desperately miss the camaraderie and social exchanges of the workplace.

COMPRESSED WORKWEEKS, FLEXTIME, AND JOB SHARING

Compressed workweek - a workweek where employees work longer hours
per day but fewer days per week.

The most common arrangement is four 10-hour days (4-40 program)

Flextime (also known as flexible work hours) - a scheduling system in which

employees are required to work a specific number hours a week but are free to
vary those hours within certain limits.
It typically designates certain common core hours when all employees
are required to be on the job, but allows starting, ending, and lunch-hour
times to be flexible.

Job sharing - the practice of having two or more people split a full-time job.

Many employees have used job sharing during the economic

downturn to avoid employee layoffs.

Chapter 11.4

Contingent workforce is a group of workers who work for an

organization on a non-permanent basis.
Contingent workers are temporary, freelance or contract workers
whose employment is contingent upon demand for their services.

a. Contingent worker structural approach can be seen in a film industry.

There, the people are essentially free agents who move form project to
project applying their skills and knowledge. This type of contingent worker is
common in project organizations.

b. Contingent workers can also be temporary employees brought in to

help with special needs like seasonal work.

ORGANIZATIONAL ISSUES ASSOCIATED WITH CONTINGENT WORKERS

1. Classifying who actually qualifies as one.
The decision on who is and who isnt an independent contractor isnt easy
as it may seem. Companies do not have to pay Social Security, Medicare,
or unemployment insurance taxes on workers classified as independent
contractors. Those individuals also arent covered by most workplace laws.
The more control the company has, the more likely the individual will be
considered an employee rather than an independent contractor. Legal or
tax issues, structural implications and how performance problems are
resolved are important in how workers are classified.
2. Process for recruiting, screening, and placing contingent workers
where their work skills and efforts are needed.
The right people must be in the right places at the right times in order to

get work done efficiently and effectively.

3. Importance of a contingent employees performance.
Like a regular employee, a contingent worker is brought on board to do
some specific task(s). It is important that managers have a method of
establishing goals, schedules, and deadline with the contingent
employees. Mechanisms should be in place to monitor work performance
and goal achievement.

Many organizational design concepts were developed during the 20th

century when work was done at an employer's place of business under a
manager's supervision, work tasks were fairly predictable and constant, and
most jobs were full time and continued indefinitely.
That organizational design concept was highly different from today, where
employees can work anywhere as long as they have communication with the
company, and it becomes possible because of the different technologies we
have.
Manager's major challenge is to find a way to offer flexibility but also keeping
widely dispersed and mobile employees connected to the organization.
Many companies provide key fobs with constantly changing encryption codes
that allow employees to access email and company data. And because of
different gadgets or technologies, employees were able to stay connected
and accomplish their works as long as there is internet.
The biggest issue in doing work anytime, anywhere, however, is security. But,
because of software and other disabling device, the company may able to
protect their important and sensitive information.

Chapter 11.5
Managers must contend with certain challenges as they choose or look
for organizational design that will best suit the company and the
employees. These challenges include:
1. Keeping Employees Connected

2. Managing Global Structural Issue

According to researchers, the structure and strategies of organizations

worldwide are similar, "while behavior within them is maintaining their
cultural uniqueness".
When designing or changing structure, managers should consider the culture
of the country and think about the cultural implications of certain design
elements.
Study showed that formalization is more important to less economically
developed countries and less important to more economically developed
countries.
Another study found out that organization from high power-distance countries
(France, Greece, and Latin America) find that their employees are much more

accepting of mechanistic structures than employees from low power-distance

countries.
As the manager choose the best organizational design, he/she must know if
that structure will support and facilitate organizational members as they
carry out organization's work.

True or False.
Instruction: Write T if the statement is true, otherwise write F on the blank
provided before each number.
_____ 1. 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.
_____ 2. Film industry is considered as the model of contingent worker
structural approach because they are full-time workers whose
employment is dependent in special needs for their services.
_____ 3. Task force is a permanent committee or team formed to tackle a
long-term problem affecting several departments.
_____ 4. Researchers have concluded that the structures and the culture
of organizations worldwide are similar.
_____ 5. Managers should consider the cultural implications of certain
design elements, when designing structure.
_____ 6. Open innovation refers to opening up the search for new ideas
beyond the organizations boundaries and allowing innovations to easily
transfer inward and outward.
_____ 7. Matrix structure violates the unity of direction principle, which
says that each person should report to only one boss.
_____ 8. One disadvantage of team structure is that teams arent
responsible for all work performance results in their areas.
_____ 9. External collaborative options include open innovation, strategic
partnerships and task forces.
_____ 10. Many companies provide key fobs for employees to access email
and company data, but the biggest issue in doing work anytime,
anywhere, however, is security. Software and other disabling devices
have maximized security issues considerably.
_____ 11. Companies with contingent workers have to pay Social Security,
Medicare or unemployment insurance taxes on workers classified as
independent contractors.
_____ 12. When a cross-functional team is formed, team members are
brought together to collaborate on resolving mutual problems that affect
the respective functional areas.
_____ 13. Through an information technology, an employee can perform a
work or specific task anytime and anywhere.

_____ 14. A compressed workweek is where employees work shorter hours

per day and fewer days per week.
_____ 15. Telecommuting is a work arrangement in which employees work
at their workplace linked by computer.

Multiple Choice.
Instruction: Read and analyze the questions carefully and choose the best
answer from the given choices. Encircle the letter of your answer.

1. It refers to hiring an employee whose skills are needed in a specific project.

a. Organizing b. Staffing c. Recruiting d. Searching

2. It expands the search for new ideas beyond the organizations boundaries
and allows innovations to easily transfer inward and outward.
a. open innovation
b. strategic partnerships

c. task force
d. internal collaboration

3. It is composed of a group of people working in a non-permanent basis.

a. Contingent workforce
b. Contingent workers

c. Virtual organization
d. Team structure

4. Collaborative relationships between two or more organizations in which they

combine resources and capabilities for some business purpose.
a. internal collaboration
b. cross-functional team

c. ad hoc committee
d. strategic partnerships

5. It is sometimes called modular organization by manufacturing firms.

a. Taskforce
b. Strategic partnership

c. Network organization
d. Internal collaboration

6.
7. 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.
a. ad hoc committee
b. cross-functional team

c. communities of practice
d. external collaboration

8. A work team composed of individuals from various functional specialties.

a. task force
b. external collaboration

c. cross-functional team
d. communities of practice

9. Theres little need for bosses to direct and control for managers serve only as
facilitators, supporters, and advocates in this organizational structure.
a. Team Structure
b. Matrix-Project Structure

c. Boundaryless Structure
d. Learning Structure

10.It is the practice where two or more people split a full-time job.

e.
f.
g.

a. Job splitting
Flextime

b. Job sharing

c. Job transferring d.

10. A scheduling system in which employees work a particular number

of hours per week.

h.

a. Compressed workweek

j.

i.

b. Flexible time

k.

c. Flexible schedule
d. Flexible work hours

l.