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Organisation Design & Structures

UNIT-II

DESIGNING ORGANISATIONAL STRUCTURES=====================================================

INTRODUCTION:

“Management is a process involving planning, organizing, directing and controlling humanefforts to state of objectives in an organization.”

The second phase of management process is organizing, which basically involves analysis ofactivities to be performed for achieving organizational objectives, grouping these activities

into various division, departments and sections so that these can be assigned to variousindividuals and delegating them appropriate authority so that they are able to carry on their

work effectively.

CONCEPT OF ORGANISATION AND ORGANISING:

n management literature, sometimes the term organisation and organizing are used interchangeably because the term organisation is used in many ways. !ut it is not correct

organisation is different from organising. "rganising is one of the functions of managementwhere as organisation refers to the institution where in the functions of management is

performed."rganising is a process of #

$etermining, grouping and structuring the activities.

%reating rules for effective performance at work.

&llocation necessary authority and responsibility.

$etermining detailed procedures and systems for different problems areas such ascoordination, communication motivation etc.

The ultimate result of organising is organisation. n other words, organising function endswith creating a structure of relationships.

FORMAL AND INFORMAL ORGANISATION:'ormal organisation refers to the structure of well(defined jobs, each bearing a definiteauthority, responsibility and accountability.

CHARACTERISTICS:

). "rganisation structure is designed by the top management to fulfill certainre*uirements.

+. %oordination among members and their control are well specified through

process, procedures rules etc.. "rganisation concentrates more on the performance of jobs and not on theindividuals performing the jobs.

nformal organisation refers to the natural grouping of people on the basis of somesimilarity in an organisation.

“t refers to people in group associations at work, but these associations are not specified inthe blue print of the formal organisation, the informal organisation means natural grouping

of people in the work situations”.

CHARACTERISTICS:

• nformal organisation is a natural out come at the work place.

• nformal organisation is created on the basis of some similarity among itsmembers. The basis of similarity may be age, place of origin, caste, religion,liking-disliking etc.

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• Membership is an informal organisation is voluntary.

• !ehavior of members of the informal organisation is coordinated and

controlled by group norms and not by the norms of formal organisation.

BASIC CONCEPTS RELATED TO ORGANISATION:

AUTHORITY AND RESPONSIBILITY:

&uthority may be defined as the power to make decisions which guide the actions ofanother. t is a relationship between two individuals, one superior, other subordinate. Thesuperior frames and transmits decisions with the e0pectation that these will be accepted bythe subordinate.

1esponsibility is defined as that obligation of an individual to carry out assigned activities tothe best of his ability. t is not merely duty that is assigned but an obligation that the dutyis performed.

PARITY OF AUTHORITY AND RESPONSIBILITY:

rinciple of authority and responsibility suggests that authority of a person should match hisresponsibility. "therwise, the performance of the managers goes unchecked where theauthority e0ceeds the responsibility. t may lead to miss(utilization of authority and vice(versa.

DELEGATION OF AUTHORITY:$elegation of authority is one of the important factors in the process of organising. t isessential to the e0istence of a formal organisation. $elegation means conferring authority

from one manager to another in order to accomplish particular assignments.

CENTRALISATION AND DECENTRALISATION:&nother highly important issue in organising is the e0tent to which authority is centralized,

or decentralized, in a formal organisation structure. n management centralization refers toconcentration of authority and decentralization refers to dispersion of authority.

SPAN OF MANAGEMENT:t refers to the number of subordinates that should be placed under single superior. Thenumber of subordinates who report to superior has two important implications.

t determines the comple0ity of individual manager job.

t determines the shape or configuration of the organisation.

The classical writers suggest that between to / subordinates as ideal depending up on the

level of management.

2.&.3racuna a 'rench management consultant has suggested a mathematical formula to fi0the number of subordinates.4e classified superior and subordinate relationship into the following5

$irect single relation ship.

$irect group relation ship.

%ross relation ships.

Direct singe re!ti"ns#i$5( $irect single relationships arise from the direct individualcontacts of the superior with his subordinates. 605( &,!,% are subordinates to 7 4ere three single relation ships.

Direct gr"%$ re!ti"n s#i$s5($irect group relationships arise between the superior and

subordinates in all possible combinations. Thus the superior may consult his subordinateswith one or more combinations.605(& with !,! with %,& with %, etc..

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Cr"ss re!ti"ns#i$s5( %ross relationships arise because of mutual interaction of

subordinates working under the common superior , such as & and !,! and %,& and %,%and & etc.. The relationship is *uite different between & and ! than ! and & from

management point of view because the type of interaction will be different in both cases.

3racuna has given formula to find various relationships with varying number ofsubordinates.

8umber of subordinates 9 n,

$irect single relationship 9 n,

$irect group relationship 9 n:+n()();

%ross relationship 9 n:n();,

Total relationship 9 n:+n -+<n();

:or;

9 n:+n() <n();.

8o. of sub ordinates 8o. of relationships

) . )

+ . =

. )/

> . >>

? . )@@= . +++

/ . )@/@

)@ . ?+)@

3racuna suggest that most ideal span for a manager is = subordinates with +++

relationships.

F!ct"rs effecting span of management5(

). %apacity of superior+. %apacity of subordinate

. 8ature of work

>. $egree of decentralization

?. $egree of planning

=. %ommunication techni*ue

A. Bse of staff assistance

/. Cupervision from others

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CONCEPT OF ORGANISATION STRUCTURE:

"rganisation structure is the pattern of relationships among various components or parts ofthe organisation. This prescribes the relationships among various activities and positions.

Cince these positions are held by various persons, the structure is the relationships amongpeople in the organisation

DEPARTMENTATION:The first task in designing an organisation structure is the identification of activities and togroup them properly. The process of grouping the activities is known as $epartmentation.

LINE ORGANISATION STRUCTUREt is also known as scalar, military, or vertical organisation and perhaps is the oldest form.n this form of organisation managers have direct responsibility for the resultsD line

organisation can be designed in two ways.

&' PURE LINE ORGANISATION:Bnder this form, similar activities are performed at a particular level. 6ach group of

activities is self # contained unit and is able to perform the assigned activities without theassistance of others

roduction Manager

E FFFFFFFFFFFFFFFFFFFFFFFFFFFFFF EFFFFFFFFFFFFFFFFFFFFFFFFFFFF E E E'oreman(& 'oreman(! 'oreman(% E E EGorker Gorker Gorker

(' DEPARTMENTAL LINE ORGANISATION:

Bnder this form, entire activities are divided into different departments on the basis ofsimilarity of activities. The basic objective of this form is to have uniform control, authority

and responsibility.

roduction Manager E FFFFFFFFFFFFFFFFFFFFFFFFFFFFFF EFFFFFFFFFFFFFFFFFFFFFFFFFFFF E E E'oreman(& 'oreman(! 'oreman(%:!ody Moulding; :Ceating; :'inishing; E E EGorker Gorker Gorker

Merits De)erits

); t is simple to understand

+; 6asy supervision H control; Iuick decisions

>; t sets clearly the direct lines ofauthority and responsibility of aline manager

); Jack of specialization

+; Jow # Morale; &utocratic approach

>; "verburden to manager

S%it!*iit+5( t is suitable to small # scale organizations where the number of subordinatesis *uite small

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LINE AND STAFF ORGANISATION:t refers to a pattern in which staff specialists advise line managers to perform their duties.

Ghen the work of an e0ecutive increases its performance re*uires the services of specialistswhich he himself can not provide because of his limited capabilities on these matters. Cuch

advise is provided to line managers by staff personal who are generally specialists in theirfields. The staff people have the right to recommend, but have no authority to enforce their

preference on other departments.

FEATURES:-• This origin structure clearly distinguishes between two aspects of administration viz.,

planning and e0ecution.

• Ctaff officers provide advice only to the line officersD they do not have any power of

command over them.

• The staff supplements the line members.

MERITS DEMERITS

&' t enhances the *uality of decision

(' 3reater scope for advancement,' t relieves the line managers.

' 1eduction of burden.

). t may create more friction or

%onflict between line and staff +. t is e0pensive

. t creates confusion

SUITABILITY: ( t can be followed in large organizations where specialization of activities

is re*uired, because it offers ample opportunities for specialization.

FUNCTIONAL ORGANISATION STRUCTURE:-t is the most widely used organization structure in the medium and large scaleorganizations having limited number of products. This structure emerges from the idea thatthe organization must perform certain functions in order to carry on its operations.

'unctional structure is created by grouping the activities on the basis of functions re*uiredfor the achievement of organizational objectives. 'or this purpose, all the functions re*uired

are classified into basic, secondary and supporting functions according to their nature Himportance.

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FEATURES:

); The whole activities of an organisation are divided into various functions+; 6ach functional area is put under the charge of one e0ecutive

; 'or any decision, one has to consult the functional specialist

MERITS DEMERITS); lanned specialization

+; 'acilitates large scale production; $isciplinary controls are well

defined>; "ffers clear career paths

); calls for more coordination

+; no clear line of authority; slow decision making>; lack of responsibility

COMMITTEE ORGANISATION: -

& committee does not represent a separate type of organization like line and staff, or

functional. t is rather a device which is used as supplementary to or in addition to any of

the above types of organizations.

& committee may be defined as a group of people performing some aspects of Managerialfunctions. Thus, a committee is a body of persons appointed or elected for the %onsiderationof specific matters brought before it.

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MATRI. ORGANISATION

t is also called project organization. t is a combination of all relationships in theorganization, vertical, horizontal and diagonal. t is a mostly used in comple0 projects. The

main objective of Matri0 organisation is to secure a higher degree of co(ordination thanwhat is possible from the conventional, organizational structures such as line and staff.

n matri0 organization structure, a project manager is appointed to co(ordinate the activitiesof the project. Bnder this system a subordinate will get instructions from two or morebosses, 2iz., administrative head and his project manager.

Merits). t offers operational freedom H fle0ibility+. t focuses on end results.

. t maintenance professional dentity.>. t holds an employee responsible for management of resources.

De)erits:-

). t calls for greater degree of coordination,+. t violates unity of command.. $ifficult to define authority H responsibility.>. 6mployee may be de motivated.

S%it!*iit+:-t can be applicable where there is a pressure for dual focus, pressure for high information processing, and pressure for shred resources.605( &erospace, chemicals, !anking, !rokerage, &dvertising etc..,

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General Manager

Production Personnel Finance Marketing

W W

Project B

Manager

W W

W W W

W W

W

W WProject B

Manager

Project C

Manager



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B"%n/!r+ Less Org!ni0!ti"n:-

Pr"*e)s with traditional organizational structures5(). Jack of fle0ibility to changing mission needs-rapidly changing

world.). Clow-poor in responding customer re*uirement.

+. 'ailure to get things to done.. %ustomer-vendor has a hard time dealing with the organization.

1#!t !re t#e *"%n/!ries2

3ertic!: !oundaries between layers within an organization.

H"ri0"nt!: !oundaries which e0ist b-w organizational departments.

E4tern!: !arriers between the organization and the out side world.:%ustomers, suppliers other govt. committees;.

Ge"gr!$#ic: !arriers among organization units located in different countries.

Pr"*e):-isolation of innovative practices H ideas.

Ghat is boundary less "rganisationKt may be defined as an organisation structure that can avoid all the barriers :vertical,horizontal, e0ternal, geographic; much more permeable than they are nowD!oundary less organisation allows free flow of ides-information - resources throughout theorganisation and into others.

& boundary less organisation is the opposite of a bureaucracy with numerous barriers anddivision. n contrast, the organisation with out boundaries offers interaction and networking

among professionals inside and outside the organisation. The organisation model is fluid andhighly adaptive, much like an open system in biology.

Lack Gelch, former %6" of 3eneral 6lectric, stated his vision for the company as a

“boundaryless company”. !y this he meant an “open, anti(parochial environment, friendlytoward the seeking and sharing of new ideas, regardless of their origin.” The purpose of thisinitiative was to remove barriers between the various departments as well as betweendomestic and international operations. To reward people for adopting the “integrationmodel,” bonuses were awarded to those who not only generated new ideas but also sharedthem with others.

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