Semester 2 Assgn. 2, Bureaucratic Vs Matrix Structure

ASSIGNMENT 2 [TYPE

THE COMPANY ADDRESS]

MANAGEMENT & ORGANIZATION BUREAUCRATIC VS MATRIX STRUCTURE

ZAHID NAZIR Roll No. AB523655 MBA Executive 2nd Semester , Spring 2009

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD COMMONWEALTH OF LEARNING EXECUTIVE MBA PROGRAMME

Zahid Nazir Roll No. 523655

ORGANIZATIONAL STRUCTURE Introduction Organization is two or more people who work together to achieve organizational goals and objectives efficiently and effectively. Also it can identify as nonrandom arrangement of components or parts interconnected in a manner as to constitute a system identifiable as a unit. In an organization, they use organizational structures for their works. We can identify there are three traditional organizational design such as simple, functional, divisional. Organizations face more strength and weakness in these structures. Nowadays they try to ignore that weakness and develop these organizational designs as Team structure, Matrix structure, Project structure, Boundaryless structure and Learning structure. Using those contemporary organizational designs organizations gain there are many advantages. Employees are more involved and empowered, Reduce barriers among functional areas, fluid and flexible design that can respond to environmental changes, faster decision making, highly flexible and responsive, draws on talent wherever it’s found, organization can cope with environmental changes and employees feel free to make decisions are advantages. So, contemporary organizational designs are better than traditional organizational structures to the organizations. “Organizational structure is the formal framework by which job tasks are divided, grouped, and coordinated”. When managers develop or change and organization’s structure, they are engaged in organizational design, a process that involves decisions about six key elements: Stephen P.Robbins & Mary Coulter

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• Work Specialization • Departmentalization • Chain of Command • Span of Control • Centralization and Decentralization • Formalization Organizational design is engaged when managers develop or change an organization's structure. Organizational Design is a process that involves decisions about the following six key elements: i).

WORK SPECIALIZATION Describes the degree to which tasks in an organization are divided into separate jobs. The main idea of this organizational design is that an entire job is not done by one individual. It is broken down into steps, and a different person completes each step. Individual employees specialize in doing part of an activity rather than the entire activity.

ii).

DEPARTMENTALIZATION It is the basis by which jobs are grouped together. For instance every organization has its own specific way of classifying and grouping work activities. There are five common forms of departmentalization: a). Functional Departmentalization. As shown in the Figure, it groups jobs by functions performed. It can be used in all kinds of organizations; it depends on the goals each of them wants to achieve.

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Plant Manager

Manager Engineering

Manager Accounting

Manager Manufacturing

Manager HR

Manager Purchasing

Figure - Functional Departmentalization

Different aspects on this type of departmentalization: Positive Aspects •

• •

Negative Aspects •

Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations Coordination within functional area In-depth depth specialization

•

Poor communication across functional areas Limited view of organizational goals goal

b). Product Departmentalization. Departmentalization. It groups jobs by product line. Each manager is responsible of an area within the organization depending of his/her specialization. specialization Different aspects on this type of departmentalization: Positive Aspects •

• •

Negative Aspects • •

Allows specialization in particular products and services Managers can become experts in their industry Closer to customers

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Duplication of functions Limited view of organizational goals

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Figure : Product Departmentalization

c). Geographical Departmentalization. Departmentalization. It groups jobs on the basis of territory or geography.

Vice President for Sales

Sales Director Punjab Region

Sales Director Sindh Region

Sales Director NWFP Region

Sales Director Balochistan Region

Figure: Geographical Departmentalization

Different aspects on this type of departmentalization: Positive Aspects •

Negative Aspects • •

More effective and efficient handling of

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Duplication of functions Can feel isolated from

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•

specific regional issues that arise Serve needs of unique geographic markets better

other organizational areas

d). Process Departmentalization. Departmentalization. It groups on the basis of product or customer flow.

Site Director

Engineering Manager

Production Manager

Quality Manager

Logistics Manager

Procurement Manager

Finance Manager

Figure: Process Departmentalization

Different aspects on this type of departmentalization: Positive Aspects •

Negative Aspects •

More efficient flow of work activities

Can only be used with certain types of products

e). Customer Departmentalization Departmentalization. It groups jobs on the basis of common customers. Different aspects on this type of departmentalization: Positive Aspects •

Customers' needs and problems can be met by specialists

Negative Aspects • •

Duplication of functions Limited view of organizational goals

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Director of Sales

Manager Retail Accounts

Manager Wholesale Accounts

Manager Government Accounts

Figure: Customer Departmentalization

iii).

CHAIN OF COMMAND It is defined as a continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom. There are three important concepts attached to this theory:

• Authority:: Refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it.

• Responsibility: Responsibility: The obligation to perform any assigned duties. • Unity of command: command: The management principle that each person should report to only one manager. iv).

SPAN OF CONTROL CONTRO It is important to a large degree because it determines the number of levels and managers an organization has. Also, determines the number of employees a manager can efficiently and effectively manage.

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v).

CENTRALIZATION AND DECENTRALIZATION More Centralization • •

• • • • •

vi).

More Decentralization

Environment is stable Lower-level managers are not as capable or experienced at making decisions as upper-level managers. Lower-level managers do not want to have say in decisions Decisions are significant. Organization is facing a crisis or the risk of company failure. Company is large. Effective implementation of company strategies depends on managers retaining say over what happens.

• •

• • •

• •

Environment is complex, uncertain. Lower-level managers are capable and experienced at making decisions. Lower-level managers want a voice in decisions. Decisions are relatively minor. Corporate culture is open to allowing managers to have a say in what happens. Company is geographically dispersed. Effective implementation of company strategies depends on managers having involvement and flexibility to make decisions

FORMALIZATION It refers to the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures.

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TYPES OF ORGANIZATIONAL STRUCTURES In making organizational design decisions, managers have some common structural designs from which to choose. Most commonly we consider about two organizational designs. These are:


Traditional organizational structure
Contemporary organizational structure.

TRADITIONAL ORGANIZATIONAL STRUCTURE When we consider the traditional organizational design, especially there are three major types of structures. They are can be listed out: • Simple structure • Functional structure • Divisional structure Disadvantages • Lack of flexibility to changing mission needs/rapidly changing world • Internal

and

external

communication

barriers

(ideas

are

communicated) • Slow/Poor in responding to customer requirements • Failure to get things done • Customers/Vendors have a hard time dealing with the organization (multiple/unknown contacts)

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Due to above reasons they need to move in creative ways to structure and organize works and to make their organizations more responsive to the needs of customers, employees and other organizational constituents. In this century, there are more favorable concepts that have being generated, especially due to global village concept most of organizations have to revise their organizational structures in order to achieve their overall objectives through making employees’ job satisfaction. Therefore the contemporary structure is used by organizations. SIMPLE STRUCTURE A simple structure is defined as a design with low departmentalization, wide spans of control, centralized authority, and little formalization. This type of design is very common in small start up businesses. For example in a business with few employees the owner tends to be the manager and controls all a of the functions of the business. Often employees work in all parts of the business and don’t just focus on one job creating little if any departmentalization. In this type of design there are usually no standardized policies and procedures. When the company mpany begins to expand then the structure tends to become more complex and grows out of the simple structure.

Owner Dept. Store

Sales Person

Sales Person

Sales Person

Simple Structure

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Sales Person

Sales Person

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FUNCTIONAL STRUCTURE The functional organization, shown in Figure, Figure is a structure in where authority rests with the functional heads; the structure is sectioned by departmental groups. Staff members are divided to groups (e.g. financial, planning, public relations, engineering, legal etc) according to their specialized knowledge. Some of these groups can be further subdivided into smaller functional groups. For example, the Engineering Department may be further subdivided into Mechanical Engineering and Electrical Engineering Units.

The main advantage of this organizational organizational structure is that each functional group has complete control over its segment of the project, enforcing in this way the application of standards across projects. The disadvantages of the functional organization are that of speed, flexibility and communication ommunication when attempting cross–functional cross functional projects. Since in a functional organization the work is divided between the departments, any query or request must be passed among department heads for approval,

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causing in this way delays. In addition, the responsibility responsibility of managing the project is shared among the functional managers (head of the departments) and this may cause lack of ultimate responsibility for project management. DIVISIONAL STRUCTURE STRUCTUR A divisional structure is made up of separate, semi semi-autonomous tonomous units or divisions. Within one corporation there may be many different divisions and each division has its own goals to accomplish. A manager oversees their division and is completely responsible for the success or failure of the division. This gets ts managers to focus more on results knowing that they will be held accountable for them.

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CONTEMPORARY ORGANIZATIONAL DESIGNS The flexible structural methods that job tasks are divided, grouped, and coordinated for response to dynamic environmental factors. To face highly dynamic and complex environment the contemporary organizational structure is very important. In response to market place demands for being lean, flexible and innovative current organization s use these contemporary structures.

• Team structure • Matrix structure • Project structure • Boundary less organizations  Network organizations  Modular organizations  Virtual organizations

• Learning organizations TEAM STRUCTURE In the team base structure, the entire organization is made up of work groups or teams that perform the organization’s work. In the team base structure, employee’s empowerment is crucial because there is no line of managerial authority from top to bottom. Rather, employee teams are free to design work in the way think is best. However, the teams are also held responsible for all work activity and performance results in their respective areas.

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In large organizations, the team structure complement what is typically a functional or divisional structure. This allows the organizations to have efficiency of a bureaucracy while providing the flexibility that team provide to improve productivity at the operational level. Examples for team structure • In marketing field sales force is use this team based structure. Also forces use this team structure. • Team based structure usually practice in unbranded products, like furniture, electric equipments, and cosmetics. Advantages Easy Integration. Since it is the most popularly used form of team organization it is easy to integrate. This is so, because every developer is experienced with such a structure and understands their role within it. Better Management, More Control. Since the entire team is physically within the same building, communication is at its peak, since face-to-face communication is by far the best method in all situations. The physicality of this team structure typically means it is easier to find and solve issues together. It is also easier to spawn a team spirit, particularly in crunch periods, which can spark increased motivation. Greater productivity, in a team based structure there are various skills and ability persons give their contribution produce a great output. Disadvantages Significant Overheads. Of course hiring a full team and owning or renting office space with all that goes with it (i.e. electricity, computers) a studio is going to run high overheads. In fact, overheads can amount to a quarter of the budget on some productions, which is an incredibly high ratio of cost.

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Arising conflicts, team based structure lead to opinion conflicts among team members.

MATRIX STRUCTURE The matrix structure of contemporary organizational structures assigns specialist from different functional departments to work on one or more projects. In matrix structure one employee should report to two managers. So the employee faces conflict when they address their superiors. To whom should I report firstly, and to whom should I obey or directly responsible. Their functional departments manager and their product or project manager who share authority. The project managers have authority over the functional members who are part of their project team in area relative to the project’s goals. However decisions such as promotions, salary recommendations and

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annual reviews remain the functional manager’s responsibilities. To work effectively, project and functional managers have to communicate regularly, coordinate work demands on employees and resolve conflicts together.

Matrix Organizational Structure

11-14

On the other hand the two managers influence to the employee so the employee should want to their works in correct way. By using matrix structure can establish high control and greater supervision throughout the project period. It may helps to increase project performance and effectiveness. In matrix structure we can easily get high performance because there is skilled, ability full and experienced employees come from different functional departments. This structure is most effective to achieve overall organizational goals. It leads to increase job satisfaction, experience and knowledge of the employees.

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PROJECT STRUCTURE An organizational structure in which employees continuously work on projects is a project structure. In a project structure has no formal departments to which employee return at the completion of a project. Instead employees take their specific skills, abilities and experience to other work project.

In addition, all work activities in project structures are performed by teams of employees who become part of a project team because they have the appropriate work skills and abilities. Project structure tends to be fluid and flexible organizational designs. There is no departmentalization or rigid organizational hierarchy to slow down decision making or taking actions. Ex-: Information Systems build by using project structure, Constructions Project structure reduces job boredom, because they work different projects, and less work specialization. Although the matrix structure work well and continued to be effective structure design choice for many organizations are using more advance types project structure, in which employees continuously work on projects. Unlike the matrix structure, a project structure has no formal

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departments to which employees return at the completion of a project. Instead, employee take there specific skills, abilities and experiences to other work projects. In addition, all work activities in project structures are performed by teams of employee who become part of a project team because they have the appropriate work skills and abilities. In this types of structures managers serve as facilitators, mentors and coaches. They “serve the project teams by eliminating or minimizing organizational obstacles and by ensuring that team has the resources they need to effectively and efficiently complete their work.

BOUNDARYLESS ORGANIZATIONS In a boundaryless organization, the boundaries that divide employees such as hierarchy, job function, and geography as well as those that distance companies from suppliers and customers are broken down. A boundaryless organization seeks to remove vertical, horizontal, and external barriers so that

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employees, managers, customers, and suppliers can work together, share ideas, and identify the best ideas for the organization. What are the boundaries? Vertical - Boundaries between layers within an organization Classic Example: Military organization Problem: Someone in a lower layer has a useful idea; "Chain of command" Mentality Horizontal - Boundaries which exist between organization functional units. Each unit has a singular function. Problem: Each unit maximize their own goals but not the overall goal of the Organization External - Barriers between the organization and the outside world (customers, suppliers, other government entities, special interest groups, communities). Customers are the most capable of identifying major problems in the organization and are interested in solutions. Problem: Lose sight of the customer needs and supplier requirements Geographic - Barriers among organization units located in different countries Instead of being organized around functions with many hierarchical levels, the boundaryless organization is made up of self-managing and cross-functional teams that are organized around core business processes that are critical for satisfying customers such as new-product development or materials handling. The traditional vertical hierarchy is flattened and replaced by layers of teams making the organization look more horizontal than vertical. Some believe that the boundaryless organization is the perfect organizational structure for the 21st century.

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Types of boundary less Organizations Network Organizations In a network organization, various functions are coordinated as much by market mechanisms as by managers and formal lines of authority. Emphasis is placed on who can do what most effectively and economically rather than on fixed ties dictated by an organizational chart. All of the assets necessary to produce a finished product or service are present in the network as a whole, not held in-house by one firm. Virtual Organizations The most interesting networks are dynamic or virtual organizations. In a virtual organization an alliance of independent companies share skills, costs, and access to one another’s markets. It consists of a network of continually evolving independent companies. Each partner in a virtual organization contributes only in its area of core competencies. The key advantage of network and virtual organizations is their flexibility and adaptability. The Modular Organization A modular organization is an organization that performs a few core functions and outsources noncore activities to specialists and suppliers. Services that are often outsourced include the manufacture of parts, trucking, catering, data processing, and accounting. Thus, modular organizations are like hubs that are surrounded by networks of suppliers that can be added or removed as needed. By outsourcing noncore activities, modular organizations are able to keep unit costs low and develop new products more rapidly. They work best when they focus on the right specialty and have good suppliers.

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LEARNING ORGANIZATIONS The concept of a Learning Organizations doesn’t involve a specific organizational design. Learning Organizations is an organization that has a developed the capacity to continuously adopt and change because all members take an active role in identifying and resolving work related issues. In a Learning Organizations, employees are practicing knowledge management continually acquiring and sharing new knowledge and are willing to apply that knowledge in making decisions or performing works. Some organizational designs theorists even go so far as to say that an organization’s ability to do this-that is, to learn and to apply that learning as they perform the organization’s work may be the only sustainable source of competitive advantage. In a Learning Organization, it is a critical for members to share information and collaborate on work activities throughout the entire organization, across different functional specialties and even at different organizational levels. This can be done by minimizing or eliminating the existing structural and physical boundaries. In this type of boundaryless environment, employees are free to work together and collaborate in doing the organizations work the best way they can and to learn from each other. Because of this need to collaborate, teams also tend to be an important feature of a learning organization’s structural design. Employees work in teams on whatever activities need to be done, and these employee teams are empowered to make decisions about doing their work or resolving issues. With these empowered employees and teams, there’s little need for “bosses” to direct and control. Leadership plays an important role as an organization moves to become a learning organization. Leaders should facilitate the creation of a shred vision for the organization’s future and then keeping organizational members working towards that vision. Also organizational culture is an important aspect of being a learning organization. A learning organization’s culture is one in which everyone agrees

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on a shared vision and everyone recognizes the inherent interrelationship among the organization’s process, activities, functions and external environment. In learning organizations, employees feel free to openly communicate, share, experiment, and learn without fear of criticism or punishment. Learning can’t take place without information. For a learning organization to “learn”, information must be shared among members, that is organizational members must engage in knowledge management.

BUREAUCRATIC STRUCTURE A structure with highly routine operating tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command. In large organizations and under well defined conditions, organization structure may be bureaucratic. The essential elements of a bureaucratic organization are: • the use of standard methods and procedures for performing work; and • a high degree of control to ensure standard performance. Mintzberg (1981) has identified two types of bureaucracies. They are standard and professional bureaucracy. Standard bureaucracy is based on efficient performance of standardized routine work. Professional bureaucracy depends upon efficient performance of standardized but complex work. Thus, it requires a higher level of specialized skills. The structure of standard bureaucracy is based on functions, large technical staff and many mid-level managers. In contrast, professional bureaucracy has few mid-level managers.

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BUREAUCRATIC ORGANIZATIONAL STRUCTURE

Director

Admin

Research

Extension

Accounts

Livestock

Consumers

Personnel

Seeds

AgriProcessing

Purchase

Pesticides

Producers

Strengths • Functional economies of scale • Minimum duplication of personnel and equipment • Enhanced communication • Centralized decision making Weaknesses • Subunit conflicts with organizational goals • Obsessive concern with rules and regulations • Lack of employee discretion to deal with problems

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PRACTICAL STUDY OF ORGANISATION

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WATEEN TELECOM COMPANY’S OVERVIEW Wateen Telecom UK Ltd embarks on providing leading international voice retail and wholesale communication services to its esteemed customers through its ability to seamlessly connect and enable smarter, faster, cost-effective and flexible solutions. Wateen continues to build on the heritage of its parent company - The Abu Dhabi Group. We believe in leadership through people. Our technology and service-delivery strengths stems from our valued employees who have joined Wateen from all over the world to earn customer trust and loyalty with a continuing commitment to the deployment of innovative products and services, reliable, high-quality service and excellent customer care.

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MISSION STATEMENT • To provide affordable communication services that meets and exceeds customers' requirements • To deliver high-quality, flexible and innovative solutions that are cost effective and conducive • To provide complete customer satisfaction on time, every time *****************

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VISION To introduce Wateen Telecom in the European and North American markets and provide the leading telecommunications international voice services through a world-class cuttingedge network to deliver a broad range of reliable, affordable and quality customercentric services.

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CORPORATE VALUES Simplicity :Practical and easy-to-use Satisfaction: Customer satisfaction is foremost Quality : Premier services; no compromises Innovation : Always at par with the latest technology Honesty : Practice what we preach: integrity, ethics and open communication

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WATEEN’S ORGANIZATIONAL STRUCTURE As shown in Figure , Wateen’s organizational structure can be divided into 2 parts: one is Business Units where the sub-units are separated based on Product Departmentalization, and the Administrative Units are categorized based on Functional Departmentalization.

Business Units are the "money-making" departments or divisions that are directly involved with the products of the company; and the Administrative Units are the departments that coordinate Wateen’s daily business operation activities.

Wateen Telecom

Figure : Wateen’s Organizational Structure Chart

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Within the Business Units, there are 8 sub-units:

• QCT (Wateen CDMA Technologies) develops and suppliers CDMA-based integrated circuits and system software for wireless voice and data communications, multimedia functions and global positioning system product.

• QTL (Wateen Technology Licensing) grants licenses to use Wateen's intellectual property, including certain patent rights essential to or useful in the manufacturing, sale and use of CDMA-based products.

• QSI (Wateen Strategic Initiatives) makes strategic investments in ventures that focus on worldwide adoption of 3G wireless communications technologies (voice and data) and products serving consumers, the enterprise and all members of the wireless value chain such as wireless network operators, device and equipment manufacturers, and application and content providers.

• QIS (Watee Internet Services) provides technology to support and accelerate the convergence of wireless data, Internet and voice services.

• QWBS (Wateen Wireless Business Solutions) provides companies around the globe with industry-leading mobility platforms, applications and services that accelerate business. These products serve a variety of industries, including transportation and logistics, third-party logistics, construction, petroleum, retail, food and beverage, and healthcare.

• QTV (Wateen Technology and Ventures) offers the MediaFLO™ system enabling wireless multimedia services and supports Wateen’s mission of enabling and fostering CDMA and wireless Internet markets through strategic investments in privately-owned startup ventures.

• QGOV (Wateen Government Technologies) provides the Unites States government with secure wireless communications solutions using CDMA,

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Wimax and other Wateen technologies. Through government funded R&D, QGOV is creating leading-edge security technology with the development of the QSec®-2700, a 3G secure phone.

• QCTest™ and Deployment Products. Wateen's focus is the creation of products that ultimately lower licensee and carrier operator costs while enabling the quickest deployment of the latest technology.

The Administrative Units consist of the following departments:

•

Human Resource Department

•

Marketing Department

•

Financial Department

•

Global Development Department Those departments coordinate the company's business operations worldwide and provide necessary resources to the production operations.

CONCLUSION At first glance, Wateen seems to employ two types of traditional designs in its structure. One is Functional Structure that applies to its Administrative Units in which departmentalization is based on the function of the departments. The other is Divisional Structure which applies to its Business Units where each division's teams are responsible for performance and have strategic and operational authority while the top management acts as an external overseer to coordinate and control the various divisions. However, Wateen also demonstrates signs of Contemporary Organizational

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Design. By exhibiting the characteristics of a team structure, a design in which an organization is made up of teams that work toward a common goal, Wateen was able to provide expertise in every specific field. Also, characteristics of a Learning Organization are thrown into the mix. Wateen was named Organization of the Year by the American Society for Training and Development in 2000. By receiving this award, Wateen demonstrated that they are a company that builds on learning and development. This recognition highlights Wateen's commitment to employee development and their focus on supporting learning with their overall business objectives. Although Wateen does show some kind of traditional organizational design characteristics, their website states: "We encourage teamwork while reinforcing the importance of individuality to enhance our inclusive atmosphere and to leverage creativity. Despite our rapid growth, we work hard to avoid the chains of bureaucracy and retain our entrepreneurial, freespirited culture," which indicates that Wateen has evolved into a semicontemporary organizational design.

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