Principles of Industrial Engineering

Organizational Structure: Principles

DHEERENDRA KUMAR DWIVEDI

MECHANICAL & INDUSTRIAL ENGINEERING DEPARTMENT

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Elements of Organizational Structure

Departmentalization Span of Control

Elements of
Organizational
Structure
Formalization Centralization
Departmentalization
• Specifies how employees and their
activities are grouped together
• Three functions of
departmentalization
– Establishes chain of command
– Creates measures of performance,
etc.
– Encourages coordination through
informal communication
Formalization
• The degree of standardization through rules,
procedures, formal training, and related
mechanisms
• Formalization increases with size, & age of Org.
• Problems with formalization
– Reduces organizational flexibility
– Discourages organizational learning/creativity
– Reduces work efficiency
– Increases job dissatisfaction and work stress
Centralization and Decentralization
Centralization
Formal decision making authority is held
by a few people, usually at the top

Decision making authority is

dispersed throughout the organization

Decentralization
 Principles of Organization
• Principle of Specialization: Work divided
amongst the subordinates on the basis of
qualifications, abilities and skills
• Principle of Functional Definition: All the
functions defined to the managers and
subordinates, e.g. Production, Marketing,
Finance
• Principles of Span of Control: Number of
employees that can be handled/controlled
effectively by a single manager
Wide span of control
– Less overhead cost of supervision
– Prompt response from the employees
– Better communication, & supervision
– Specialization of work
– Better co-ordination
– Repetitive jobs
 Narrow span of control
The work and authority is divided amongst many subordinates
– More hierarchical organization
– More growth opportunities
– Expensive
– Less empowerment
– Difficult communication
– Poor co-ordination
 Principle of Unity of Command
Top-Down approach: One Subordinate-one Superior
– No communication gaps
– Prompt feedback and response
– Easy and effective organization

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Organizational Structure
• Line (Military)
– Oldest and scalar
– Relationships are based on rank/authority
– Immediate supervisor is boss
Major General
Brigadier General (Brigade)
Colonels (Regiment)
Lieutenant-Colonels (Battalions)
Captain (Companies)
Lieutenants (Sub-groups)
Corporal (Squad)
Organizational Structure
Line and staff structure

Staff

Line
Organizational Structure - Types
Functional structure
Organizational Structure - Types
Divisional Structure
• Organizes employees around outputs, or geographic areas
• Separate but self-contained divisions

CEO

Lighting Consumer
Healthcare
Products Lifestyle
 Consideration for developing structure
• Potential future growth
• Suitable for productive system
• Product to be manufactured
• Competing factors
– Quality
– Cost
– Flexibility ,
– Dependency for supply to customers

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