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DESIGNING ORGANIZATIONAL STRUCTURES
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UNIT – I (B)
DESIGNING ORGANIZATIONAL STRUCTURES
BASIC CONCEPTS RELATED TO ORGANIZATION
The term organization is used in the following ways:
۩ Organization as Entity۩ Organization as Group of people۩ Organization as Structure۩ Organization as process
DEPARTMENTATION
The first real task in designing an organization structure is the identification of activities and group them properly.
The process of grouping activities is commonly known as Departmentation.
NEED for DEPARTMENTATION
The basic need for departmentation arises because of specialization of work and the limitation on the number of subordinates that can be directly controlled by a supervisor.
IMPORTANCE OF DEPARTMENTATION
1. Advantages of Specialization2. Fixation of Responsibility3. Development of Managers4. Facility in Appraisal5. Feeling of Autonomy
BASES OF DEPARTMENTATION
The most commonly used bases are:1. Function 2. Product3. Territory 4. Process5. Customer
FUNCTIONAL DEPARTMENTATION
Board of Directors
MANAGING DIRECTOR
PRODUCTION MARKETING FINANCE PERSONNEL
MARKET RESEARCH ADVERTISING SALES
NEWS PAPERS MAGAZINES
RADIO
TV
PRODUCT DEPARTMENTATION
Chief Executive
Car Division Truck Division Bus Division
MARKETINGPRODUCTION FINANCE PERSONNEL
TERRITORIAL DEPARTMENTATION
Head Office
EASTERN ZONE
CENTRAL ZONE
NORTHERN ZONE
SOUTHERN ZONE
WESTERN ZONE
DIVISION 1 DIVISION 2 DIVISION 3 DIVISION 4
BRANCH 1 BRANCH 2
PROCESS DEPARTMENTATION
MANAGER
(Production)
SPINNING DYEING WEAVING FINISHING
CUSTOMER DEPARTMENTATION
MANAGER
(Production)
MARKETING
MANAGER
Whole Sale Retail Hire Purchase
Export
DECENTRALIZATION
Decentralization applies to the systematic delegation of authority in an organization-wide context.
Decentralization is used to denote dispersal of physical facilities place-wise or function-wise.
FACTORS DETERMINING DEGREE OF DECENTRALIZATION
۩ Size of Organization۩ History of Organization۩ Management Philosophy۩ Availability of Managers۩ Pattern of Planning۩ Control Techniques۩ Decentralized Activities۩ Rate of change in organization۩ Environmental Influences
LINE ORGANIZATION
Line Organization structure is also known as scalar, military or vertical organization and perhaps is the oldest form.
This concept holds that in any organization or hierarchy derived from a scalar process, there must be a single head who commands it.
LINE ORGANIZATION (contd…)
Line Organization can be designed in two ways:
1. Pure Line Organization: Similar activities are performed at a particular level.
2. Departmental Line Organization: Entire activities are divided into different departments on the basis of similarity of activities.
PURE LINE ORGANIZATION
Chief ExecutiveChief Executive
FOREMAN A FOREMAN B FOREMAN C
Workers Workers Workers
DEPARTMENTAL LINE ORGANIZATION
Production Manager
Foreman (Spinning)
Foreman (Weaving)
Foreman (Dyeing)
Foreman (Finishing)
WorkersWorkersWorkers Workers
CHARACTERISTICS OF LINE ORGANIZATION
۩ Lines of authority and instructions are vertical.
۩ The unity of command is maintained in a straight and unbroken line.
۩ All persons of the same organization are independent of each other.
۩ This structure specifies responsibility and authority for all positions limiting the area of action by a particular position holder.
MERITS OF LINE ORGANIZATION
Simplicity Discipline Prompt Decision Orderly communication Easy supervision and control Economical Overall development of Managers
DE MERITS OF LINE ORGANIZATION
X Lack of SpecializationX Absence of Conceptual ThinkingX Autocratic ApproachX Problems of CoordinationX Lack of Ground work for subordinates’
Training
LINE AND STAFF ORGANIZATION
It refers to a pattern in which staff specialists advise line managers to perform their duties.
In actual practice, sometimes it is difficult to determine which departments are line or staff.
LINE AND STAFF ORGANIZATION
The problem can usually be solved by classifying activities within an organization in two ways:
1. That which is substantive (direct) in its contribution – Line activities
2. That which is objective (indirect) in its contribution – Staff activities
LINE AND STAFF ORGANIZATION
GENRAL MANAGER Public Relations Officer
Secretary
Manager (Finance) Manager (personnel)
Manager - Production Manager - Marketing
Production Engineer Production Engineer
Workers Workers
MERITS & DEMERITS OF LINE AND STAFF ORGANIZATION
MERITS: Planned Specialization Quality Decisions Prospect for Personal Growth Training Ground for Personnel
DEMERITS:X Lack of well defined AuthorityX Line and Staff conflicts
FUNCTIONAL ORGANIZATION
It is created by grouping the activities on the basis of functions required for the achievement of organizational objectives.
CHARACTERISTICS:1. Specialization by functions2. Emphasis on sub-goals3. Pyramidal growth of Organization4. Line and staff division5. Limited span of management6. Functional authority relationships among departments
FUNCTIONAL ORGANIZATION
Head Quarters
Production Marketing Finance Personnel
Plant 1 Plant 2 Plant 3
P M F P P PM MF FP P
COMMITTEE ORGANIZATION
It can be defined as a body of persons appointed to meet on an organized basis for the discussion and dealing of matters brought before it.
FEATURES:1. Group of persons2. Can deliberate only on matters that are
brought before it3. Members of the committee draw authority
through delegation.
MATRIX ORGANIZATION
Matrix Organization is the realization of two-dimensional structure which emanates directly from two dimensions of authority.
1. Pure project structure2. Functional structure
Structure :President
VP(Production)
VP(Marketing)
VP(Finance)
Project AManager
Project BManager
W
W
W
W
W
W
MATRIX ORGANIZATION STRUCTURE
VIRTUAL ORGANIZATION
Virtual Organization is a temporary network of independent companies – suppliers, customers, even erstwhile rivals – linked by information technology to share skills, costs and access to one another’s markets.
It will have neither central office nor organization chart. It will have no hierarchy, no vertical integration.
CELLULAR ORGANIZATION
It is a form of organization consisting of a collection of self-managing firms or cells held together by mutual interest. A cellular organization is built on the principles of self-organization, member ownership, and entrepreneurship.
Each cell within the organization shares common features and purposes with its sister cells but is also able to function independently.
TEAM STRUCTURE
A Team is a group of people in the organization constituted for completing certain assignments.
TYPES:1. Lead Team2. Cross-functional Team3. Problem-solving Team4. Self-managing Team
BOUNDARYLESS ORGANIZATION
It is a model that views organizations as having permeable boundaries. An organization has external boundaries that separate it from its suppliers and customers, and internal boundaries that provide demarcation to departments.
This rigidity is removed in boundaryless organizations, where the goal is to develop greater flexibility and responsiveness to change and to facilitate the free exchange of information and ideas.
BOUNDARYLESS ORGANIZATION
The concept was developed at General Electric and described in the book The Boundaryless Organization: Breaking the Chains of Organizational Structure by Ron Ashkenas and others, which was published in 1995.
FLAT ORGANIZATION
Flat structure is that which reduces the levels of management, widens span of control of managers at various levels of the organization, and is often more decentralized with regard to decision making autonomy.
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