Organizational Structure

ORGANIZATIONAL STRUCTURE and DESIGN

ORGANIZATION :SYSTEMOrganization should be viewed as a

system.A System is a Set of

Interacting Elements that Acquire INPUTS from the Envnt.

TRANSFORM them and DISCHARGES OUTPUTS to the External Environment.

ORGANIZATION :SYSTEM

INPUTS: Employees, Raw Materials & other Physical Resources Information and Financial Resources

TRANSFORMATION PROCESS: It CHANGES these Inputs into sthg. of VALUE that can be EXPORTED back to the ENVIRONMENT

ORGANIZATION :SYSTEM

OUTPUT: Specific Products or Services

Employee Satisfaction

Pollution and Other By-products

ORGANIZATION:

CLOSED SYSTEMIt would not Depend on its Environment,

Autonomous, Enclosed, and Sealed off from OUTSIDE world.

More Focused on Internal System

Early Management Concepts including Scientific Management approach....

The Environment would be STABLE and Predictable Primary Management ISSUE: Efficiency

ORGANIZATION: OPEN SYSTEM

It must Interact with Environment to Survive

-It both Consumes Resources and Exports Resources to the Environment.

It must continuously Change and Adapt to the Environment

Internal Efficiency is just One Issue sometimes the Minor one

ORGANIZATION: SUBSYSTEM

They perform the Specific Functions required for Organizational Survival, such as; PRODUCTION MAITENANCE BOUNDARY SPANNING ADAPTATION MANAGEMENT

ORGANIZATION: SUBSYSTEMSPRODUCTION SUBSYSTEM: Produces the Products or Services outputs of the organization

BOUNDARY SUBSYTEM: Responsible for Exchanges with the External Environment e.g., Purchasing or Marketing Products

MAINTENANCE: Maintains Smooth Operations and Upkeep of the organization’s Physical and Human Elements

ORGANIZATION: SUBSYSTEMS

ADAPTIVE SUBSYSTEM:It is Responsible for Organizational Change and Adaptation

MANAGEMENT SUBSYSTEM: It is Responsible for Coordinating and Directing the Other Subsystems of the organization.

ORGANIZATIONAL CONFIGURATION

Various PARTS of the organization are Designed to Perform the Key Subsystem Functions.

Every Organization has FIVE PARTS(according to Henry Mintzberg)1. TECHNICAL CORE2. TECHNICAL SUPPORT3. ADMINISTRATIVE SUPPORT 4. TOP MANAGEMENT 5. MIDDLE MANAGEMENT


1. TECHNICAL CORE: Produces the products and services outputs of the organization

2. TECHNICAL SUPPORT: - Helps the organization to adapt to Environment. - Scanning of the Environment for Problems, Opportunities, Technological Development


3.ADMINISTRATIVE SUPPORT -Smooth Operations and Upkeep of the Organization including its Physical and Human Elements that is, HR Activities- Recruiting and Hiring, Compensation, T & D, Maintenance Activities- Cleaning, Repair of Machines


MANAGEMENT 4. TOP MANAGEMENT: It provides Direction, Strategy, Goals, and Policies for the Entire organization. 5. MIDDLE MANAGEMENT It is Responsible for Implementation and Coordination at the Departmental Level -Mediating bt. Top Management and the Technical Core

ORGANIZATIONAL STRUCTURE

ORGANIZING The Process of Creating an Organization’s Structure

ORGANIZATIONAL STRUCTURE How Job Tasks are Formally Divided, Grouped, and Coordinated

ORGANIZATIONAL DESIGN It is concerned with the Developing or Changing the Organizational Structure-A process that involves decisions about Six Key Elements;

Key Design Questions for Designing the proper Organizational Structure

1. To what degree are Activities are Subdivided into Separate Jobs?2. On what basis will Jobs be Grouped Together?3. To Whom do Individuals and Groups Report?

. 4. How many Individuals can a Manager Efficiently and Effectively Direct?5. Where does Decision Making Authority Lie? 6. To What Degree there will be Rules and Regulations to Direct Employees and Managers?


Organizational Design Six key Elements 1. Work Specialization-Division of Labor -The Degree to which Tasks/ Activities in an organization are divided into Separate Jobs. -A Job is broken down in Steps and each Step is done by a different person

1. Work Specialization

Human Diseconomies from Specialization came to be known as BOREDOM, FATIGUE, STRESS, LOW PRODUCTIVITY, POOR QUALITY, INCREASED ABSENTEEISM and HIGH TURNOVER

2. DEPARTMENTALIZATION

It is the basis of grouping the JobsWays of Classifying and Grouping Work Activities

a. FUNCTIONAL: Groups Jobs by Functions

Performed. It is the most popular way to GROUP ACTIVITIES

2. DEPARTMENTALIZATION-

FUNCTIONAL:…Can be Used in ALL types of Organizations, Only the Functions Change to Reflect the Organization’s Activities

It puts together Efficiencies due to similar


Organizational Design

b. PRUDUCT Departmentalization: Groups Jobs by the Type of Product or

Product Line.The major Advantage is the Increased ACOUNTABILITY for product PERFORMANCEEach Major Product Area is Placed under the Authority of a Manager for Everything regarding that Product



c. PROCESSGroups jobs on the basis of Product Flow

Each Dept. is Specializes in ONE SPECIFIC PHASE of PRODUCTION

It can also be Used for processing CUSTOMERS as well as products


Organizational Designd. GEOGRAPHICAL …

Groups jobs on the basis of Territory or Geography

e. CUSTOMERGroups jobs on the basis of Common CustomersMicrosoft- organized around Four Customer Markets;Consumers, Businesses, Large Corporations, Software Developers



3. CHAIN OF COMMANDIt is the Continuous Line of Authority that extends from upper organizational level to lower levels and CLARIFIES Who Reports to Whom.

Authority and Unity of CommandThese concept do not have Substantial Relevance today because of Advancements in Information Technologyand Trend toward Empowering Employees



4. SPAN OF CONTROL

Number of employees a manager can Efficiently an Effectively Manage

The Wider or Larger the Span, The more Efficient the Organization



7. FORMALIZATON In organizations with high Formalizations there are Explicit Job Descriptions, Numerous Rules, Clearly Defined ProceduresCovering Work Processes -In short it is the extent to which employee behavior is Guided by Rules and Procedures -Employees have little Discretion as to what is to be Done? When and How?





5.CENTERLIZATION

6.DECENTERLIZATION The degree to which Lower level employees provide input or actually make decision

Two models of Organizational Design 1. MECHANISTIC

This organization has Rigid, and Tightly Controlled Structure and Characterized by: High Specialization Rigid Departmentalization Narrow Span of Control High Formalization and Little Participation in decision making by the lower-level employees

ORGANIZATIONAL STRUCTURE Organizational Design

2. ORGANIC ORGANIZATION

Highly Adaptive and FlexibleCross-Functional Teams

Cross Hierarchical Teams

Free flow of Information

Wide span of control

Decentralization . Low Formalization


Employees are highly Trained and Empowered to handle Diverse Job Activities and Problems.

The High Levels of Skills, Training and the Support provided by other Team Members make Formalization and Tight Managerial Controls Unnecessary.


CONTIGENCY FACTORS What an appropriate structure of an organization should be depends on Four Contingency factors:

1. Organization’s Strategy 2. Size 3. Technology 4. Degree of Environmental Uncertainty


1. STRATEGY and STRUCTURE: -Structure should Follow Strategy-It must facilitates the Achievement of

Organizational Goals-Current Strategy Framework; Focus on three

Dimensions: A.INNOVATORS Organization’s Pursuit of Meaningful and Unique Innovations.

-they Need Flexibility – Organic Stcr.

ORGANIZATIONAL STRUCTURE Organizational Design2. COST MINIMIZATION:

Pursuit of tightly Controlled Costs- they Seek the Efficiency, Stabilityand Tight Control: MECHANISTIC

3. IMMITATION: Minimizing the Risk and Maximizing the Profit by Copying the Market Leader

-They use the characteristics of both the Structures Mechanistic; Tight Control, Low Costs Organic ; to Mimic the Industry’s Innovative Directions


2. SIZE AND STRUCTURE -Large Organizations….Mechanistic --the Relationship is not Linear

3. TECHNOLOGY and STRUCTURE a. Unit Production

b. Mass Production c. Process Production-More Routine the Technology…-More Non-routine the Technology…


4. ENVIRONMENTAL UNCERTAINTY and STRUCTURE

The greater the uncertainty, the more an organization needs FLEXIBILITY which is offered by the Organic organization


TRADITIONAL ORGANIZATIONAL DESIGNS

1. SIMPLE STRUCTURE:

A. Low Departmentalization

b. Wide Span of Control

c. Authority Centralized in a Single person

d. Little Formalization

ORGANIZATIONAL STRUCTURE TRADITIONAL ORGANIZATIONAL DESIGNS

2. BUREAUCRACY

Highly Routine Operating Tasks Achieved through -Specialization -Very Formal Rules & Reg.. -Tasks Grouped into Functional Depts. -Centralized Authority -Narrow Span of Control -Decision making follows Chain of Command

ORGANIZATIONAL STRUCTURE: Bureaucracy

The primary Strength lies in its Ability to Perform Standardized Activities in a highly Efficient Manner

Putting Like Specialists together in Functional Depts. Results in economies of scale

Minimum duplication of Personnel and Equipment

ORGANIZATIONAL STRUCTURE: Bureaucracy

Works best with Less Talented- Low/Middle Level ManagersGreater prevalence of Rules and Regulations Substitutes Managerial DiscretionLittle need for Innovative and Experienced Decision makers below the Senior ExecutivesSpecialization creates Subunits Conflicts- Functional Unit goals Override the overall goals of the org.


MATRIX STRUCTURECombines two forms of departmentalization: Functional and ProductIt attempts to gain the Strengths of Each, while Avoiding their WeaknessesIt Breaks the Unity of command concept- Dual Chain of command

MATRIX STRUCTURE

It has Ability to Facilitate coordination When the organization has a multiplicity of complex and Interdependent activities

The dual line of Authority reduce the Tendencies of departmental members to become so busy protecting their interests over the organization’s overall goals.

NEW DESIGN OPTIONS

TEAM STRUCTURE

Management uses Teams as Coordination Device

It breaks down departmental barriers and decentralizes Decision making to the level of the Work Team

NEW DESIGN OPTIONS

VIRTUAL ORGANIZATIONThey are small organizations that OUTSOURCE major business functionsIt is highly Centralized, with little or no Departmentalization

- Movie Making orgs.- Reduces long-term risks, because there is no

long term- a team Assembled for a Finite period and then Disbanded

NEW DESIGN OPTIONS

BOUNDARYLESS ORGANIZATIONBreaking down the External Barriers bt. The company and its Customers and SuppliersIt seeks to Eliminate the Chain of Command Have Limitless Span of Control Replace departments with Empowered Teams

ORGANIZATION DESIGN AND EMPLOYEE BEHAVIOR

Work Specialization contributes to higher employee Productivity but at the price of Reduced Job Satisfaction

- But Individual differences prevailThe negative behavioral outcomes from high specialization are most likely to surface in Professional jobs occupied by individuals with High Needs for Personal Growth and Diversity


Relationship bt.Span of Control and Employee Performance- Individual Differences Prevail

However there is some evidence that A Manager’s Job Satisfaction increases as the Number of Employees Supervised Increases


There is strong evidence linking Centralization and Job Satisfaction

Less Centralized orgs. Have a Greater amount of Participative Decision Making which is positively Related with Job Satisfaction


The Decentralization- Satisfaction relationship is Strongest with employees who have LOW SELF-ESTEEM

They have less confidence in their abilities

They place higher value on shared decision making- thus to share Responsibilities

Education

Organizational Structure