changing org structure

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CHANGING ORGANIZATIONAL STRUCTURE VISHNU GOPAKUMAR

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Describes olden and current forms of organizational structure

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Page 1: Changing org structure

CHANGING ORGANIZATIONAL STRUCTURE

VISHNU GOPAKUMAR

Page 2: Changing org structure

What is organizational structure?

•  The levels of management and division of 

responsibilities within an organization

• Break down of the managers and the different 

departments within an organization

• It shows who manages who and how the 

organization is split up to perform different tasks 

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What is organizational structure?

• As a business expands it means that the 

business will more than likely take on more 

staff. 

• With the addition of new staff more 

managers may be needed or managers will 

be responsible for new staff. 

• This will change the structure

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BUILDING BLOCKS OF STRUCTURE

• Which elements of a company’s structure 

make  difference in how we behave and 

how work is coordinated? 

• Four aspects

– Centralization

– Formalization

– Hierarchical levels 

– Departmentalization

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CENTRALIZATION

• Degree to which decision-making authority is 

concentrated at higher levels in an organization

• Many important decisions are made at higher levels 

of the hierarchy, whereas in decentralized 

companies, decisions are made and problems are 

solved at lower levels by employees who are closer to 

the problem in question. E.g. CATERPILLAR

• Decentralized companies give more authority to 

lower-level employees, resulting in a sense of 

empowerment

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CENTRALIZATION

• Some employees are more comfortable in an 

organization where their manager confidently gives 

instructions and makes decisions. 

• Centralization may also lead to more efficient 

operations, particularly if the company is operating 

in a stable environment

• Organizations can suffer from extreme 

decentralization, E.g. FBI

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FORMALIZATION

• Extent to which an organization’s policies, procedures, job 

descriptions, and rules are written and explicitly articulated

• Control employee behavior using written rules, so that 

employees have little autonomy to decide on a case-by-case 

basis

• It makes employee behavior more predictable

• Whenever a problem at work arises, employees know to turn to 

a handbook or a procedure guideline. Therefore, respond to 

problems in a similar way across the organization; this leads to 

consistency of behavior

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FORMALIZATION

• A high degree of formalization may actually lead to 

reduced innovativeness

• Reduced motivation and job satisfaction as well as a 

slower pace of decision making

• The service industry is particularly susceptible to 

problems associated with high levels of 

formalization

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HIERARCHICAL LEVELS

• Number of levels it has in its hierarchy– Tall structure

• Many managers to report to

• Mainly in well est. org - Greater job security

– Flat structure

• Less managers to report to

• Greater need satisfaction

• Limited advancement opportunities

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DEPARTMENTALIZATION

• Functional– Based on similarity in functions (Mktg, fin, HR, etc)

– Each person serves a specialized role and handles large

volumes of transactions

• Divisional– Departments represent the unique products, services, 

customers, or geographic locations the company is serving– Each unique product or service the company is producing will have its own department

– employees act like generalists as opposed to specialists

Page 13: Changing org structure

Functional

Divisional

Page 14: Changing org structure

Rates & Ratios (As on 28/3/2014)Ratios Rates

Cash Reserve Ratio 4.00

Statutory Liquidity Ratio 23.00

Cash-Deposit Ratio 4.78

Reverse Repo Rate 6.50

Bank Rate 8.50

Savings Deposit Rate 4.00

Marginal Standing Facility (MSF) Rate 8.50

Page 15: Changing org structure

Exchange ratesCountry Exchange rate

Australian Dollar 55.433

Brazilian real 26.5

British Pound 99.87

Chinese Yuan 9.67

Euro 82.65

Singapore Dollar 47.60

Swiss Franc 67.81

US dollar 59.96

South African rand 5.67

Saudi Riyal 15.99

Page 16: Changing org structure

CONTEMPORY FORMS OF ORG STRUCTURE

• Matrix organizations

– Created in response to uncertainty and dynamism of the 

environment and the need to give particular attention to 

specific products or projects

– Have a design that combines a traditional functional 

structure with a product structure

– Balance the benefits of product-based and traditional 

functional structures

Page 17: Changing org structure

• Matrix organizations– Employees reporting to department managers are also 

pooled together to form project or product teams

– Product managers have control and say over product-

related matters, while department managers have authority 

over matters related to company policy

– Increase communication and cooperation among 

departments because project managers will need to 

coordinate their actions with those of department 

managers

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• Boundaryless organizations– Eliminates traditional barriers between departments as well 

as barriers between the organization and the external 

environment

– Modular Organization

• nonessential functions are outsourced

• retain only the value-generating and strategic functions in-house

– Strategic alliances

• similar to a joint venture, two or more companies find an area of 

collaboration and combine their efforts to create a partnership that is 

beneficial for both parties

Page 20: Changing org structure

• Learning organizations– Actively seeks to acquire knowledge and change behavior as 

a result of the newly acquired knowledge. 

– Experimenting, learning new things, and reflecting on new 

knowledge are the norms

– Are also good at learning from experience—their own or a 

competitor’s

– At IBM, learning is encouraged by taking highly successful 

business managers and putting them in charge of emerging 

business opportunities (EBOs)

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ORGANIZATIONAL CHANGE

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WHY DO ORGANIZATIONS CHANGE?

• Movement of an organization from one state of 

affairs to another. 

• A change in the environment often requires change 

within the organization operating within that 

environment

• Change involves letting go of the old ways in which 

work is done and adjusting to new ways.

• Therefore, fundamentally, it is a process that involves 

effective people management

Page 23: Changing org structure

– Organizational change is often a response to changes to the 

environment

– Organizations may realize that as the workforce gets older, 

the types of benefits workers prefer may change

– Flexible work hours and job sharing to facilitate retiring 

employees

– Dealing with age-related stereotypes which act as barriers in 

the retention of these employees

Workplace Demographics

Page 24: Changing org structure

– Rapid developments in technology 

– Moore’s Law – complexity double every 18 months with no 

increase in costs

– Sometimes technology produces such profound developments 

that companies struggle to adapt, E.g. CD’s

Technology

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• Differences in national economies and standards of 

living from one country to another

• Organizations in developed countries are finding that 

it is often cheaper to produce goods and deliver  

services in less developed countries

• Out source & Offshore

Globalization

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• E.g. World Trade Center attack

• Simultaneous widespread of internet booking 

encouraged them to compete primarily based on cost

• Cut back on amenities

• Whether the organization changes or not in response 

to environmental challenges and threats depends on 

the decision makers’ reactions to what is happening 

in the environment

Changes in Market Conditions

Page 27: Changing org structure

• GROWTH & POOR PERFORMANCE

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• Essential for a company to remain competitive.

•  Failure to change may influence the ability of a 

company to survive.

• Resistance to change is one of the top reasons 

change efforts fail. 

RESISTANCE TO CHANGE

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• Active resistance - sabotage the change effort and be 

outspoken objectors to the new procedures• Passive resistance - involves being disturbed by changes without necessarily voicing these opinions

• Compliance - involves going along with proposed changes with little enthusiasm

• Enthusiastic support - defenders of the new way and actually encourage others around them to give support to the change effort as well

Reactions To Change

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• Disrupted habits

• Personality

• Feeling of uncertainty

• Fear of failure

• Personal impact of Change

• Percieved loss of power

Reasons to Resist

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• LEWIN’S 3 STAGE PROCESS

– Unfreeze• Ensures employees are ready 

– Change• Execute

– Refreeze• Ensures it becomes permanent 

PLANNING & EXECUTING CHANGE

Page 32: Changing org structure

THANK YOU