ORGANIZATIONAL STRUCTURE

Presented by:Suhail Gaziani 75Darshana Shinde 112Shweta Matta 88Ritesh Gandhi 72

What is an Organizational Structure?

Organizational Structure is the system of task, reporting, and authority relationships within which the work of the organization is done.

Structure defines the form and function of the organization’s activities.

Structure also defines how the parts of an organization fit together.

Elements of Organizational Structure

Work specialization

Departmentalization

Chain of command

Span of control

Centralization and decentralization

Formalization

Work Specialization

It is the extent to which the organization’s work is separated into different jobs to be done by different people.

Advantages

Efficient use of labor

Reduced training costs

Increases productivity

Disadvantages

Repetitive jobs

Reduced job satisfaction

Decreases productivity

Departmentalization

Departmentalization refers to the process of grouping activities into departments.

Usually, the more specialized the jobs within the organization, the greater the departmentalization.

Basis of Departmentalization

Function Type of product Geography Type of customer Process

By Function

By Type of product

By Geography

By Type of customer

Loan Division

Retail Loan Commercial Loan Agricultural Loan

By Process

Chain of Command

It is an unbroken line of authority that

extends from the top of the organization

to the lowest level and clarifies who

reports to whom.

It answers questions for employees such as “To whom do I go if I have a problem?” “To whom am I responsible?”.

Span of Control

Span of control refers to the number of subordinates a manager can efficiently and effectively direct.

It is the number of people directly reporting to the next level

Centralization and Decentralization

Centralization - The degree to which decision making is concentrated at a single point in the organization.

Decentralization - The degree to which decision making is spread throughout the organization.

Formalization

It refers to the degree to which jobs within the organization are standardized.

It is the extent to which rules and procedures are followed in an organization.

TYPES OF ORGANIZATIONAL STRUCTURE

Types of

Organizational

Structure

FUNCTIONAL

SIMPLE

DIVISIONAL

MATRIX

SIMPLE STRUCTURE

Low departmentalization Wide spans of control Authority centralized in a single person Little formalization Commonly used by small businesses

Owner

Executive 1

Executive 2 Executive 3

PROS CONS

FAST

FLEXIBLE

INEXPENSIVE

CLEAR ACCOUNTABILITY

MORE SUITABLE FOR SMALL ORGANIZATIONS.

RELIANCE ON ONE PERSON IS RISKY

Functional Structure

Groups employees together based upon the functions of specific jobs within the organization. 

CEO

R & D Production MarketingAccounting and Finance

PROS CONS

Simple to understand with clear lines of command

Specified tasks and responsibilities.

Staff can specialize in a particular business area  

Interdepartmental conflict

Coherence and good communication are particularly hard to achieve between virtually independent functions.

Divisional Structure

Groups each organizational function into a division

Divisions can be categorized on geographical basis, market basis, or on product/service basis

Each division has relatively limited autonomy

Parent corporation acts as an external overseer to coordinate and control the divisions

PROS CONS

Encourage team spirit 

Managers can develop broad skills as they have control of all basic functions

Risk of duplicating activities which can increase cost and reduces efficiency

Matrix Structure

Combines functional and divisional departmentalization

Dual lines of authority

PROS CONS

Better cooperation across functions

Improved decision making

Increased flexibility better customer service

Better performance accountability

Improved strategic management

Two-boss system is susceptible to power struggles

Team meetings in the matrix are time consuming

Requirements of adding team leaders can result in increased costs.

Emerging Organizational Structure

New organizing principles

1.Strong employee involvement

2. Authority based on capability

3. Teams

4.Mindfulness of environments, changes, patterns and themes

Network structure

It includes linking of numerous separate organizations to optimize their interaction in order to accomplish a common overall goal.

Egs-construction companies

Team organization

No supervisors in the company.

The team is granted sufficient authority and access to resources to produce their product

Team members develop their own process for identifying and rotating members in managerial roles

Fishnet organization

Flexible organization design

Form and reform varied pattern of connection

Learning organization

Managers do not direct as much as they facilitate workers.

For a learning organization ‘adaptive learning’ must be joined by ‘generative learning’.

The manager of this type of organization requires high value on communication and a great deal of patience.

Why Do Structures Differ?

Mechanistic Model

A structure characterized by extensive departmentalization, high formalization, a limited information network, and centralization.

Organic Model

A structure that is flat, uses cross-hierarchical and cross-functional teams, has low formalization, possesses a comprehensive information network, and relies on participative decision making.

Mechanistic Versus Organic Models

Why Do Structures Differ?

Organization Size

Strategy

Technology

Environment

Strategy

Innovation Strategy

Cost- Minimiza

tion

Imitation Strategy

Strategy – Structure Relationship

Innovation• Organic :

Loose Structure

Cost- Minimization• Mechanistic :

Tight Control

Imitation• Mechanistic

and Organic : Mix of loose with tight properties

Technology

Routine

• Routine technologies are associated with tall, departmentalized structures and formalization in organizations.

Non routine

• Customized Activities

Three- Dimensional Model Of Environment

Bharti Airtel

Tata Motors