Video Lecture Leader as a Structural Architect I Elements of Structure Work specialization how specialized are you going to make work Starting with scientific management work has been specialized to gain efficiency tasks have gotten more specific easy to train people drives down labor cost But recently this has caused more turnover and less satisfaction if it is too specialized because people get bored Therefore work has been at times larger If people see work as more meaningful they are more meaningful Chain of Command historically firms had very tight chain of command with unity 1 boss with clear hierarchy of command this has been changing more recently however last 20 years has become flexible coordinate specialist Span of Control narrow 3 4 people reporting to a boss to broad 7 people reporting as spans become broader you need less levels of management flatter structures historically there has been more narrow span of control in organizations today with need to be more flexible and more innovative we have seen a more broader span of control de layering of hierarchy so pushing management down into teams groups Centralization Decentralization where you put power in firm if centralized it is located in a few positions near top of hierarchy historically firms were more centralized can get away with this if there are few changes in past 20 30 years there has been a movement toward pushing power lower down in firm through decentralization this allows for more flexibility Formalization how standardized jobs and tasks are historically we have seen highly formalized firms common rules and procedures it allows for high command of control but if in a changing environment formalized procedures break down and don t apply to new things so there has been a movement away from formalization to a more flexible structure With these first 5 things historically they go together and reinforce efficiency and control and are like a bureaucracy Recently they have moved away from what they initially meant Departmentation how you are going to group the task how you will take your labor force and put it into meaningful groups Firms looking for new leaders with skills to operate new structures of flexibility Departmentation by Function HISTORICALLY Example Plant Manager s job is to manage disputes between Manager R D Manager Sales Manager Production and Manager Accounting As you add products and services the probability of conflict increases exponentially Departmentation by Self Contained Unit Product 3 VP s based on product separate coordination with little conflict President manages the vice president fuels vice president chemicals and vice president lubricants VP Fuels manages R D Sales and Production VP Chemicals manages R D Sales and Production VP Lubricants manages R D Sales and Production Departmentation by Self Contained Unit Customer NOT HIT ON MUCH President manages Vice President Government Accounts Vice President Retail Accounts VP Wholesale Accounts Departmentation by Self Contained Unit Geography NOT HIT ON MUCH President manages VP Asia VP North Arctic VP Europe and VP South America Organization Designs Simple Structure Bureaucracy Matrix Virtual Boundaryless Horizontal Simple Structure like a small mom and pop store start to all bureaucracy dominant structure Authority is centralized in the owner few specialized people who do everything developing Informal lack of structure Benefits Inexpensive Flexible Costs Inefficient highly Dependent on the owner Bureaucracy BECOMES when process of reducing costs over time Functional Departments Standardized Tasks High formalization and centralization Benefits Efficiency but not flexible Low labor costs Costs Coordination problems Rule bound Matrix Structure combines two structures to gain their advantages Functional and product departmentation Possibility of conflict Two bosses specialists fit area of need Benefits if is works big if Coordination across multiple products projects Efficient allocation of specialists professionals Costs Confusion and power struggles Leadership skills Stress USC DEPARTMENT EXAMPLE Undergrad 5 MBA programs Doctoral all have indiv Specialist Virtual Organization Small centralized core Outsource major business function determine what you do best as a company EX focus on marketing and outsource to companies who do other things better Benefits Gain scale without mass don t need many employees to be successful big firms resist this structure because they like being in control Flexible and adaptive Can quickly access new markets Costs Loss of Control Hard to form and mange Requires high managerial skill requires trust can I trust who I am outsourcing Example TelePad They could sell anything any product nobody could outsell them They wanted to make a handheld so they used outsourcing They had GVO Inc make it they used Intel engineering they needed a battery maker to manufacture the batteries they had designed they went to IBM plant manufacturing for help with assembling products Boundaryless or Horizontal Organization wants to take down boundaries Organize around core business processes example new product development sales and order fulfillment and customer support Use multi disciplinary teams to manage processes replace un functional conflicts with teams and have specialists self manage with each other de layering management with flexibility Owner for each process Reduce vertical and horizontal boundaries reduce barriers between companies by forming alliances and cost effective flexible structure Communication via networked computers Benefits Highly flexible and business focused Reduces control and coordination costs Costs Difficult to implement Requires new skills and methods New information technology Dupont s Horizontal Organization look at graph on slide 28 all have boundaries example with cross functional teams Structural Designs Summary Mechanistic High Formalization High Centralization Bureaucracy High Specialization Narrow Span of Control Organic Low Formalization High Decentralization Simple Structure Matrix Structure Virtual Organization Boundaryless Horizontal Organization informal and innovative wider span and less specialization team based Determinants of Structure Strategy structure follows strategy strategy dictates structure different strategies Innovation Minimize cost Imitation Size increase in size more formalized Technology degree of routiness drives structure to a large degree if standard technology