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Organizational Structure: Presented by
Organizational Structure: Presented by
FLOW of Presentation
Elements that define organizations structure Different Organizational Designs
Three traditional organizational designs
Organizational Structure
Organizational Design
A process involving decisions about six key elements:
Work specialization
Departmentalization Chain of command Span of control Centralization and decentralization Formalization
Organizational Structure
Low
Work Specialization
High
Overspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover.
Organizational Structure
Process
Grouping jobs on the basis of product or customer flow
Product
Grouping jobs by product line
Customer
Grouping jobs by type of customer and needs
Geographical
Grouping jobs on the basis of territory or geography
Organizational Structure
Advantages
Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations
Coordination within functional area In-depth specialization Disadvantages
Home Appliances
Computers
Telecom devices
Television
Refrigerat or
Washing Machine
Laptop
Desktop
Mobile
Keyboard
Speaker
Accessori es
+ + +
Allows specialization in particular products and services Managers can become experts in their industry Closer to customers Duplication of functions Limited view of organizational goals
Organizational Structure
Advantages More effective and efficient handling of specific regional issues that arise Serve needs of unique geographic markets better Disadvantages Duplication of functions Can feel isolated from other organizational areas
Organizational Structure
Accounts
Registrati on
Vehicle Check
Driving test
Processin g
Approval
Dispatch
New Registrati on
Penalty
+ More efficient flow of work activities Can only be used with certain types of products
Organizational Structure
Organizational Structure
Authority
The rights inherent in a managerial position to tell people what to do and to expect them to do it.
Unity of Command
The concept that a person should have one boss and should report only to that person.
Organizational Structure
Organizational Structure
Employee characteristics
Characteristics of the work being done Similarity of tasks
Complexity of tasks
Physical proximity of subordinates Standardization of tasks
Organizational Structure
Decentralization
Organizations in which decision-making is pushed down to the managers who are closest to the action.
Easier coordination of organizational activities. Exercise of strong leadership in crisis. Faster decision making and response.
Organizational Structure
Organizational Structure
Part-2
Traditional Structures
Simple structure
Low departmentalization, Wide spans of control, Centralized authority, Little formalization Flat Organization (2 or 3 vertical levels)
Strengths
Simple Fast and flexible Inexpensive to maintain Clear accountability
Owner
Weaknesses
Sales Person1
Sales Person2
Sales Person3
Cashier
Stock Keeper
Delivery Boy
Information Overload at top Slower decision making if large Dependency on one figurehead
Organizational Structure
Traditional Structures
The Bureaucracy
High departmentalization by function, Narrow span of control, Centralized authority, High formalization
Strengths
Efficiency to perform standardized tasks Economies of scale Minimum duplication of personnel & equipment Cost advantage by less talent hunting
Weaknesses
Subunit Conflicts (Bureaupathologies) Fails to take environment into account Is less effective during change or turbulence, requiring flexibility and action Ignores interpersonal relationships
Organizational Structure
Traditional Structures
The Matrix structure
Strengths
Strength of both function and product departmentalization Better and direct communication Two-boss More Flexibility employee Reduce Bureaupathologies Maximizes use of employees skills
Weaknesses
Dual chain of command Power struggle Role conflict Less predictability
Organizational Structure
The entire organization is made up of work groups or selfmanaged teams. Require Generalists as well as specialists employee No departmentalization, Decentralized
Strengths
Flexibility Empowered employees Reduced barriers among functional areas (Cross-functional)
Weaknesses
No clear chain of command Pressure on teams to perform
Organizational Structure
A small core organization that outsources its major business functions in order to concentrate what it does best. Highly centralized, no departmentalization Only coordination and controlling relationships
Strengths
Choosing best alternatives always Best for finite period existence (e.g. Olympics) Maximum flexibility
Weaknesses
Organizational Structure
It behaves more like an organism encouraging better integration among employees and closer partnerships with Stakeholders. No chain of command, limitless spans of control
Strengths
Highly flexible and responsive Draws on talent wherever its found Cross hierarchical team, Cross functional team No external boundaries
Weaknesses
Lack of control Communication difficulties
Organizational Structure
Part-3
High specialization
Rigid departmentalization Clear chain of command Narrow spans of control
High formalization
Centralization Limited information network (downward)
Less formalization
Decentralization Free flow of information
Organizational Structure
Contingency Factors
Structural decisions are influenced by:
Imitation Strategy
Cost-minimization Larger
Strategy Size
Innovation Smaller
Routine Stable
Technology
Non-routine Dynamic
Environment Simple
Organizational Structure
Complex
Structural Designs
Mechanistic Organic
Causes
Determinants
Organizational Structure
Outcome