Organizational Structure And Design

ORGANIZATIONAL ORGANIZATIONAL STRUCTURE STRUCTURE and and DESIGN DESIGN

ORGANIZATION :

SYSTEM

Organization 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 :

• OUTPUT:

SYSTEM

Specific Products or Services Employee Satisfaction Pollution and Other By-products

ORGANIZATION:

CLOSED SYSTEM It 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: SUBSYSTEMS • PRODUCTION 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 CORE 2. TECHNICAL SUPPORT 3. ADMINISTRATIVE SUPPORT 4. TOP MANAGEMENT 5. MIDDLE MANAGEMENT

ORGANIZATIONAL CONFIGURATION • 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

ORGANIZATIONAL CONFIGURATION

• 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 ActivitiesCleaning, Repair of Machines

ORGANIZATIONAL CONFIGURATION • 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 STRUCTURE

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 Jobs • Ways of Classifying and Grouping Work Activities

• a. FUNCTIONAL:

Groups Jobs by Functions Performed. It is the most popular • way to GROUP ACTIVITIES

2. DEPARTMENTALIZATIONFUNCTIONAL: • …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 STRUCTURE

Organizational Design

b. PRUDUCT Departmentalization:

Groups Jobs by the Type of Product or Product Line. • The major Advantage is the Increased ACOUNTABILITY for product PERFORMANCE • Each Major Product Area is Placed under the Authority of a Manager for Everything regarding that Product

ORGANIZATIONAL STRUCTURE

Organizational Design

c. PROCESS • Groups 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 STRUCTURE

Organizational Design

d. GEOGRAPHICAL …

• Groups jobs on the basis of Territory or Geography e. CUSTOMER • Groups jobs on the basis of Common Customers • Microsoft- organized around Four Customer Markets; Consumers, Businesses, Large Corporations, Software Developers

ORGANIZATIONAL STRUCTURE

Organizational Design

3. CHAIN OF COMMAND

It 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 Command • These concept do not have Substantial Relevance today because of Advancements in Information Technology and Trend toward Empowering Employees

ORGANIZATIONAL STRUCTURE

Organizational Design

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

ORGANIZATIONAL STRUCTURE

Organizational Design

7. FORMALIZATON

In organizations with high Formalizations there are Explicit Job Descriptions, Numerous Rules, Clearly Defined Procedures Covering 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?

ORGANIZATIONAL STRUCTURE

Organizational Design

ORGANIZATIONAL STRUCTURE

Organizational Design

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 Flexible • • • • •

Cross-Functional Teams Cross Hierarchical Teams Free flow of Information Wide span of control Decentralization . Low Formalization

ORGANIZATIONAL STRUCTURE Organizational Design • 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.

ORGANIZATIONAL STRUCTURE Organizational Design • 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

ORGANIZATIONAL STRUCTURE Organizational Design 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 Design

2. COST MINIMIZATION: Pursuit of tightly Controlled Costs - they Seek the Efficiency, Stability and 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

ORGANIZATIONAL STRUCTURE Organizational Design 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…

ORGANIZATIONAL STRUCTURE Organizational Design 4. ENVIRONMENTAL UNCERTAINTY and STRUCTURE The greater the uncertainty, the more an organization needs FLEXIBILITY which is offered by the Organic organization

ORGANIZATIONAL STRUCTURE Organizational Design 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 Managers • Greater prevalence of Rules and Regulations Substitutes Managerial Discretion • Little need for Innovative and Experienced Decision makers below the Senior Executives • Specialization creates Subunits ConflictsFunctional Unit goals Override the overall goals of the org.

ORGANIZATIONAL STRUCTURE MATRIX STRUCTURE

• Combines two forms of departmentalization: Functional and Product • It attempts to gain the Strengths of Each, while Avoiding their Weaknesses • It Breaks the Unity of command conceptDual 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 ORGANIZATION They are small organizations that OUTSOURCE major business functions It 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 ORGANIZATION • Breaking down the External Barriers bt.

The company and its Customers and Suppliers • It 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 prevail • The 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

ORGANIZATION DESIGN AND EMPLOYEE BEHAVIOR • 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

ORGANIZATION DESIGN AND EMPLOYEE BEHAVIOR • 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

ORGANIZATION DESIGN AND EMPLOYEE BEHAVIOR • 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