Chapter 11
Adaptive Organizational Design
In the last chapter, the basic options for organizational structure were discussed. In this
chapter, we continue to address the issue of structure with an emphasis on the new
designs that companies are implementing to deal with an increasingly competitive
environment that focuses on efficiency.
LEARNING OBJECTIVES
2. Discuss how organizations organize for collaboration.
4. Discuss organizing issues associated with a contingent workforce.
5. Describe today’s organizational design challenges.
It’s Your Career
Staying Connected
The odds are good that at some point in your career, you’ll be offered the opportunity to
telecommute/work at home. (According to a recent survey, 37 percent of workers say
their company offers that option). Although you might be efficient, not being physically at
the workplace can make it seem like you’re totally disconnected from what’s going on.
When working as a remote employee—or even if you, at some point, manage someone
in that kind of work arrangement—it’s important to find ways to make the work
relationship, well . . . work. And work well! Here are some suggestions for staying in the
organizational loop and making you a valuable employee:
1. Stay focused and productive. Time management is absolutely critical.
2. Communicate. Communicate. Communicate. Communication is always
3. Choose appropriate technology. Know and choose the tools that are most
appropriate for your situation.
4. Be aware of the “people” aspects of remote work arrangements. When a
CHAPTER OUTLINE
11.1 Contemporary Organizational Designs
Many of today’s organizations are finding that traditional hierarchical
organizational designs are not appropriate for their increasingly dynamic and
complex business environments. See Exhibit 11-1 for a summary of these
designs.
. A. Team structures
B. Matrix and project structures
Other variations in organizational arrangements are based on the fact that
many of today’s organizations deal with work activities of different time
requirements and magnitude.
1. One of these arrangements is the matrix structure, an
2. Another of these designs is the project structure, an
organizational structure in which employees continuously work on
projects.
C. The Boundaryless Organization
Another approach to organizational design is the boundaryless
organization, an organization whose design is not defined by, or limited
to, the horizontal, vertical, or external boundaries imposed by a
predefined structure.
1. The Virtual Organization
2. The Network Organization
A network organization uses its own employees to do some
FUTURE VISION: Flexible Organizations
In the future, it is predicted that organizations will increasingly rely on contract
employees and part-timers to get the work done. The result of this will be organizations
with greater flexibility. Because workers will be doing pieces of work for multiple
companies, it means greater control over their own career and less dependency on a
single employer. This type of arrangement is similar to today’s consultants who work on
assignments for varying time frames.
Where employees work is also expected to change. Employees should expect to
work in geographically dispersed areas, not so much in ‘headquarter cities.’ This may
also mean that a greater percentage of workers will be able to work either from home or
satellite offices, cutting down on commuting distances.
The following discussion questions are posed:
Talk About It 1: What are the challenges of “flexibility” for organizations and managers?
For workers?
Talk About It 2: What about you? How do you feel about working like this?
Student answers to these questions will vary.
11.2 Organizing for Collaborating
Organizations need to be more flexible in how work gets done. Throw in the fact
that innovation and the ability to bring innovations to market quickly is critical and
you can begin to appreciate how traditional top-down decision-making that strictly
follows the chain of command and narrowly defines functional arrangements
might not be the best structural mechanisms to do this. Exhibit 11-3 lists some
of the benefits and drawbacks of working collaboratively.
A. Internal Collaboration
When managers believe that collaboration among employees is needed
for more coordinated and integrated work efforts, they can use several
different structural options. Some of the more popular include cross-
functional teams, task forces, and communities of practice.
1. Cross-Functional Teams. Organizations are using team-based
2. Task Forces. Another structural option organizations might use is
3. Communities of Practice. These are “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
B. External Collaboration
When managers seek out customers to help solve problems, they are
engaging in external collaboration. External collaboration comes in two
forms: open innovation and strategic partnerships. Each of these can
provide organizations with needed information, support, and contributions
to getting work done and achieving organizational goals.
1. Open Innovation. This form of innovation opens up the search
2. Strategic Partnerships. This type of structure involves
11.3 Flexible Work Arrangements
As organizations adapt their structural designs to fit a diverse workforce, growing
competition, customer demands, and new technology, we see more of them
adopting flexible working arrangements. Such arrangements not only exploit the
power of technology, but also give organizations the flexibility to deploy
employees when and where needed.
A. Telecommuting
Telecommuting is a work arrangement in which employees work at
home and are linked to the workplace by computer.
1. Telecommuting provides the company a way to grow without
having to incur any additional fixed costs such as office buildings,
2. Some managers are reluctant to have their employees become
3. Employees often express the same concerns about working
4. Managing telecommuters then becomes a matter of keeping
B. Compressed Workweeks, Flextime, and Job Sharing
2. Flextime (also known as flexible work hours), which is a
3. Job sharing, which is the practice of having two or more people
split a full-time job.
11.4 Contingent Workers
Contingent Workers are temporary, freelance, or contract workers whose
employment is contingent upon demand for their services.
A. As organizations eliminate full-time jobs through downsizing and other
organizational restructurings, they often rely on a contingent workforce to
fill in as needed.
B. One of the main issues businesses face with their contingent workers,
especially those who are independent contractors or freelancers, is
classifying who actually qualifies as one.
1. Companies don’t have to pay Social Security, Medicare, or
2. The federal government is also looking at increasing their power
to penalize employers that misclassify workers. So, there is an
C. Another issue with contingent workers is the process for recruiting,
screening, and placing these contingent workers where their work skills
and efforts are needed.
D. As with full-time employees, it’s important that managers have a method
of establishing goals, schedules, and deadlines with the contingent
employees.
LEADER MAKING A DIFFERENCE
CEO John T. Chambers has created an organizational structure at Cisco that relies on
cross-functional teams. While complicated to explain to outsiders, Chambers feels that
the “speed, skill, and flexibility” of his team base structure is a way to react to a changing
environment. At the end of the 2001 downturn, Cisco wrote off some $2.2 billion in
losses. Chambers realized that the “company’s hierarchical structure precluded it from
moving quickly into new markets.” The move to cross–functional teams hasn’t been
easy, some couldn’t handle working with unfamiliar colleagues; others were upset with
the new team-based compensation structure.
What can you learn from this leader making a difference?
Student answers to these questions will vary.
11.5 Today’s Organizational Design Challenges
Many of today’s organizations are finding that traditional hierarchical
organizational designs are not appropriate for their increasingly dynamic and
complex business environments.
A. Keeping employees connected
Today’s managers face the major challenge of keeping their employees
connected to the organization, since these employees are often situated
in widely dispersed locations and are constantly moving.
B. Managing global structural issues
1. Researchers have concluded that although structures of
2. These differences imply that managers must be aware and
11-1. Describe the four contemporary organizational designs. How are they similar?
Different?
In a team structure, the entire organization is made up of work teams. The matrix
structure assigns specialists from different functional departments to work on one or
Copyright © 2016 Pearson Education, Inc.
11-2. Differentiate between matrix and project structures.
A project structure, unlike the matrix structure, has no formal departments where
11-3. How can an organization operate without boundaries?
11-4. What types of skills would a manager need to effectively work in a project
structure? In a boundaryless organization? In a learning organization?
11-5. How does each of the different types of collaboration (both internal and external)
contribute to more coordinated and integrated work efforts?
11-6. What structural issues might arise in managing employees’ flexible work
arrangements? Think about what you’ve learned about organizational design. How might
that information help a manager address those issues?
Although an organization’s work may be done anywhere at any time, organizing remains
3, Explain flexible work arrangements used by organizations, AACSB: Analytical
thinking)
11-7. Does the idea of a flexible work arrangement appeal to you? Why or why not?
11-8. Why is it a challenge to “keep employees connected” in today’s organizations?
This question seems strange with all of the communication technology available today
(i.e. cell-phones, e-mail, electronic meeting software, etc…). However, with
Student answers to these questions will vary.
ETHICS DILEMMA
Student answers to these questions will vary.
You hear it in the news every week: a hacker (or hackers) has gained access to
personal data of thousands of customers or employees. In the dilemma described here,
a security hole in an AT&T Web site allowed Goatse Security to retrieve the email
addresses for thousands of new iPad users. The head of Goatse Security pointed out
they were doing AT&T a favor by identifying the problem. On the other hand, the
information released by Goatse could have helped hackers break into AT&T’s Web site.
In this dilemma, ask students if there is such a thing as “ethical hacking?” What ethical
issues do they see in the case? And what are the implications for various stakeholders
in this situation?
11–11. What do you think? Is there such a thing as “ethical hacking?”
11-12. What ethical issues do you see here? What are the implications for various
stakeholders in this situation?
SKILLS EXERCISE: DEVELOPING YOUR
ACQUIRING POWER SKILL
Managers need to know how to acquire and use power if they are to perform well in their
job. When a manager has power, he or she is not as dependent on others for critical
resources. And if the resources a manager controls are important, scarce, and
WORKING TOGETHER: TEAM EXERCISE
In this exercise, students should form small groups of three to four individuals and then
find current information on learning organizations. Students should limit their report to
what they consider to be the best sources of information on the topic. Using this
information, they should then write a one-page bulleted list discussing reactions to the
• Since you may be a telecommuter some time during your career (or may manage
employees who are telecommuters), do some research on tips for making
• Find the most current list of Fortune’s Best Companies to Work For (usually
published in early February). Look through the list and tally how many of the top
50 provide some type of flexible work arrangements for their employees and the
• Using current business periodicals, do some research on open innovation efforts
by companies. Choose three examples of businesses using this, and describe
• Create a chart describing each adaptive organizational design discussed in this
chapter, along with what you perceive as potential advantages and
• Steve’s and Mary’s suggested readings: Richard Donkin, The Future of Work
(Palgrave Macmillan, 2010); Philip Kotler and John A. Caslione, Chaotics: The
Business of Managing and Marketing in the Age of Turbulence (Amacom, 2009);
Paul Osterman, The Truth About Middle Managers (Harvard Business School
Press, 2008); and Gary Hamel, The Future of Management (Harvard Business
• In your own words, write down three things you learned in this chapter about
being a good manager. (LO: 1, Describe contemporary organizational designs,
• Self-knowledge can be a powerful learning tool. Go to mymanagementlab and
complete these self-assessment exercises: How Well Do I Handle Ambiguity? Do
I Trust Others? Do Others See Me as Trustworthy? and How Well Do I Respond
to Turbulent Change? Using the results of your assessments, identify personal
strengths and weaknesses. What will you do to reinforce your strengths and
improve your weaknesses? (LO: 1, Describe contemporary organizational
Student answers to these questions will vary.
You Work Where?
11–13. Evaluate Yahoo!’s new work initiative. Did it have to be an “all or nothing”
11-14. What can managers and organizations do to help employees who work from
home be efficient and productive?
Keeping employees connected may be the key to helping employees who work at home
11-15. Take the three main concerns—productivity, innovation, and collaboration.
From the perspective of management, how do you think flexible arrangements stack up?
How about from the employee’s perspective?
11-16. Is face time (that is, showing up at work to be seen by your boss and others)
critical to one’s career? Discuss.
Again, student views may differ. Many students will make the argument that being
11-17. Is being able to work remotely important to you? Why or why not?
Many traditional college students have come of age during the widespread adoption of
Student answers to these questions will vary.
Organizational Volunteers
11–18. What do you think about using “volunteers” to do work that other people get paid
to do?
The concept of free labor is now being explored by Verizon’s e-commerce unit where
volunteers who are passionate about their products, (i.e. high speed internet, telephone,
and television service) help answer customer questions. While this sounds like a win-win
(people who are knowledge experts working for free), it has the potential to create a lot
of problems for the organization. Have students explore the concept of management
control and structure for this new type of arrangement. Questions that might arise
include: How do you make sure people show up for ‘work?’ What if these volunteers
make a mistake that puts the company at risk for a lawsuit? What if they are rude to
11–19. If you were in Mark Studness’s position, what would you be most concerned
about in this arrangement? How would you “manage” that concern?
11–20. How do these “volunteers” fit into an organization’s structure? Take each of the
six elements of organizational design (see Chapter 10, pp. 289–300) and discuss how
each would affect this structural approach.
The six elements in organizational design are work specialization, chain of command,
11–21. Do you think this approach could work for other types of work being done or in
other types of organizations? Explain.
Students may find several examples where volunteers could be useful. Some may be