1organization structure

7/31/2019 1organization Structure

1/21


2/21

Organizational structure is about how jobs areformally divided, grouped and coordinated.The key design question and answer fordesigning proper structure: -The key Questions

Q 1. To what degree task subdivided into separate jobs. Referred as Work SpecializationQ2. On what basis jobs will be grouped together?

Referred as Departmentalization.


3/21

Q3. To whom individuals and groups report? Referredas Chain of Command

How many individuals can a manager efficiently andeffectively handle? Referred as Span of control.Q5. Where does decision-making authority lies? Thearea relevant to this is centralization anddecentralizationQ6. To what degree rules and regulations to directmanagers and employer? Referred as Formalization.


4/21

Departmentalization---- After dividing jobs through aboveprocess of work specialization, there is need to group jobstogether so that common tasks can be coordinated.

Four ways of Departmentalization-1. Functions: - Efficiencies from putting like specialties together.

Economies of scale by placing people with common skillstogether.

2. Product: - Increases accountability for product performance.3. Geography: - Large areas have similar needs based on

location.4. Process: - Machine Shop, lathe, welding, milling. Each

department specialization in one specific productiontechnique


5/21

DepartmentalizationOn basis of Customers: - MS(Microsoft) Consumers- large

Corporate software developers, small business.Each department common set of problems and needs thatcan best be met by having specialist for each.Large organization Japanese Electronic firm

Each division along function and linesManufacturing---- around processes

Sales around seven geographical regionsEach sales region on basis of a consumer groups.Important: - As task become more complex and more

diverse, skills are needed to accomplish tasks -management turn to cross functional team.


6/21

CHAIN OF COMMANDThe unbroken line of authority that intends from top of theorganization to the lowest echelons and clarifies who reportswhom: -

To whom do I go when I have a problemTo whom am I responsible.

Authority: - Rights inherent in a managerial position to give ordersand expert the order to be obeyed.

Why? To facilitate coordination, each managerial position is givena place in chain of command, and each manager is given adegree of authority in organization to meet his responsibility.

When it has less relevance: - Due to empowerment of employees:-

Network computers allowed employees anywhere inorganization to communicate anyone else without formalchannels.

Operating employees empowered to make decisions,previously reserved for management.

Self managed cross functional teams and new structuraldesigns that include multiple bosses.


7/21

SPAN OF CONTROL

How many employees ----- a manager efficientlyand effectively direct.It determines no. of level and managers organizationhas?Narrow or small spans lie more hierarchies: -Following disadvantages: -1. Expensive because it adds levels of management.2. Vertical communication difficult, decision making slow.3. Discourage employee autonomy.


8/21

SPAN OF CONTROLTrends: - wide span of control: -

Reduce costCut overheadSpend decision makingIncrease flexibility, get closer to customer

Empower employees


9/21

Degree to which decision making is concentrated ata single point in the organization.

Implication: - The more lower level personnelprovide input or are actually given the discretion tomake decision, the more decentralized.Formalization : - the degree to which jobs within theorganization are standardized.Implication: - High Formalization- employees can beexpected always to handle the same input in exactlythe same way, resulting in a consistent and uniformoutput.


10/21

COMMON ORGANIZATION DESIGNS

Small Organization: - Simple structure low degree of departmentalization, wide span of control, authority centralized ina single person, and little formalization.But as it grows big information overload at top- decision makingbecomes slower if organization size increases.

The bureaucracy: - A structure with highly routine operating tasksachieved through specialization, very formalized rules andregulation, tasks that are grouped into functional departments,centralized authority, narrow span of control and decision makingthat follows the chain of command.

Primary strength of bureaucracy lies in its ability to performstandardized activities in a highly efficient manner.


11/21

Specialization creates subunit conflicts. Functionalunit goals can override the overall goals of theorganization.The bureaucracy is efficient only as long asemployees confront problems that they have

previously encountered and for which programmeddecision rules have already been established.Matrix Structure : - Matrix combines two forms of departmentalization: - functional and product.


12/21

Strengths: - Putting specialists together, which minimizes the no.necessary while allowing the pooling and sharing of specializedresources across products.Disadvantages: - Difficulty of coordinating the task of diversefunctional specialists so that their activities are completed ontime and within budget.

MATRIX: -Gain Strength of each while avoiding weaknessesStrength: -

1. Ability to facilitate coordination when the organization has amultiplicity of complex and interdependent activities.

2. Facilitates efficient allocations of specialists.Disadvantages: - Reporting to more than one boss introduces roleconflict, unclear expectations. introduce role ambiguity. Thecomfort of bureaucracys predictability is absent, replaced byinsecurity and stress.


13/21

Team Structure: - A device to coordinate work activitiesThe primary characteristics of team structure are that itbreaks down departmental barriers and decentralizeddecision making to level of the work team. Team structuresalso require employees to be generalists as well as specialists.In large organization, the team structure complements whatis typically a bureaucracy.Example: -

Motorola, Xerox, Saturn self managed teams forimproving productivity.Boeing, HP need to design new products or coordinatemajor projects cross functional team formed.


14/21

THE VIRTUAL ORGANIZATIONThe core of the organization is a small group of executives whose job is to oversee directly anyactivities that are done in house and to coordinaterelationships with other organization thatmanufactures distribute and perform other crucialfunctions for virtual organization.The major advantage is its flexibility.The primary drawback is that it reducesmanagement control over key parts of its business.


15/21

Independent R & DConsulting Firm

ExecutiveGroup

Advertising Agency

Commissioned SalesRepresentatives

Factories in SouthKorea


16/21

ORGANIZATION DESIGNThe Boudaryless/ Horizontal Organization: - AnOrganization that seeks to eliminate the chain of

command, have limitless span of control, and replacedepartments with empowered teams.Reorganizing vertical and horizontal teams.

Cross hierarchical teams, which includes top executives, middlemanager, supervisors and operative employees,

Participative decision making practices, and the use of 360degree performance appraisal. Example of GE is there whichbreak down vertical structure.

To reduce these horizontal barriers is to replacefunctional departments with cross functional teams

and organize activities around processes.Example some AT & T units are now doing annualbudget based not on functions or department but onprocesses such as maintenance of worldwidetelecommunication network.


17/21

1. Strategy: - Structures should follow strategy. The structure will need tobe modified to accommodate and support this change.Three types: -Innovation: - Organic A loose structure low specialization, lowformalization and decentralization.Cost minimization: Mechanistic Tight control, extension workspecialization, high formalization high centralization.Imitation: - Mechanistic and organic Mix of loose with tight

properties, tight control over current activities and looses controls fornew undertaking.2. Organization Size: - 2000 or more people tend to move

specialization, more departmentalization, more vertical levels, morerules and regulations than do small organization , size affectsstructure at decreasing rates.

Impact of size becomes less important as an organization expands.3. Technology: - How an organization transfer its inputs into outputs.

technologies: - degree of routine-ness technology tend eitherroutine or non routine activities. Routine functions are Automated &Standardized operations. Non routine activities like custom shoemaking technology is used for customization.


18/21

Technology & Org. StructureTherefore Relationship between technology andformalization is usually positive.Relationship between technology and centralization:-

Routine technologies Centralized structureNon Routine Technologies Decentralized structure.

Moderated by degree of formalization: -If degree high decentralizationIf degree low centralization.

Environment; Institutions or forces outside Organization thatpotentially affect the Org. Performance.

The organization that operate in scarce, dynamic andcomplex( having intense competition) face greater degree of uncertainty. They have little room for error, highunpredictability and diverse set of elements in theenvironment. To monitor constantly. The more degrees of uncertainty the more organic a structure should be.


19/21

ORGANIZATIONAL DESIGN & EMPLOYEEBEHAVIOR

Work Specialization: - Higher employeeproductivity but reduced job satisfaction butindividual difference more important some feelsatisfied with specialization.Research Negative behavior outcomes fromhigh specialization are most likely to surface inprofessional jobs occupied by individuals withhigh needs of growth and diversity.

2. Span of Control Studies no relationshipbetween it and performance.Individual difference more important Someprefer autonomy other security of boss.


20/21

ORGANIZATIONAL DESIGN & EMPLOYEEBEHAVIOR

Employees abilities and degree of structure

determines span of control, if abilities more

spancan be wider.3. Centralization and job satisfaction Less Centralized

greater amount of participative decision making

leads to greater satisfaction.Individual Differences: - Low Esteem dont preferdecentralization or participative decision making.Therefore individual differences + culture difference

(countries with high power distance prefermechanistic structures)At times of selection individual characteristicsshould be matched with organization charac.


21/21

SUMMARYOrganization Structure- Its determinants & outcome

1determines2 leads to 3 moderated by 41.Causes: Strategy, Size, Technology, Environment2.Sructure Designs: Mechanistic, Organic, Imitation3. Performance and Satisfaction4. Individual differences and Cultural differences.Other Conclusions:1) If controls are tight, behavior will tend to

vary within narrow range2) If reverse greater behaviordiversity.

Structure not only defines What I am suppose to do, whom Ihave to report etc. but also constraint to the extent that itlimits and controls what one does.

Also important is implicit model of Organization- Perception thatpeople hold regarding structured variables formed byobserving things around them . It is that which will effect their

behaviors ( Apart from formal structure how informalsystems are working also important)

1organization structure

Documents