Organization Structure and Design

Organizing There are six Basic Elements that can be used in constructing an organization :-
1. Designing Jobs
2. Grouping Jobs
3. Establishing reporting relationships between jobs
4. Distributing authority among jobs
5. Coordinating activities among jobs
6. Differentiating among positions
I Job Specialization
Organization Structure refers to the overall set of elements that can be used to configure an
& organization
Job Design is the determination of an individuals work related responsibilities

1. Job Specialization the degree to which the overall task of the organization is broken down
and divided into smaller component parts
Advantages :-
i) Workers performing smaller roles will become proficient at those tasks
ii) Transfer time between tasks reduces
iii) When an employee is required to fill in for a person with this specialized role, training the new
person is easy since tasks are less

Disadvantages :-
i) Monotony sets in with workers involved in specialized jobs, as no challenge or stimulation
ii) Moving work in process from one worker to another caused more wastage of time compared to
moving workers from one job to another

Alternatives to Job Specialization
2. Job Rotation
3. Job Enlargement horizontal

4. Job Enrichment vertical enhancement
5. Job Characteristics Approach takes into account the work system and employee
preference ( skill based, task identity, Task significance, autonomy, feedback)
6. Work Teams





Core Job
Dimensions
Critical
Psychological
States
Employee
-Growth
-Need
-Strength
Personal and Work
Outcomes
Skill Variety
Task Identity
Task Significance
Experienced
meaningful
of the work
Autonomy
Experienced
responsibility for the
outcomes of the work
Feedback

Knowledge of the actual
results of the work activities
High Internal work motivation
High Quality work performance
High satisfaction with the work
Low absenteeism and turnover
The Job Characteristics Model (5
th
alternative)
( Core Job characteristics which should be taken into account in Job Design for Smart Working)







produces drives

II - Departmentalization
Departmentalization grouping of jobs according to some logical arrangement
1. Functional Departmentalization
Advantages :-
a) Staffing is done by experts in that functional area
b) Supervision is possible because the manager needs to be familiar with only a narrow set of skills
or expertise
c) Coordinating within the department is easier
Disadvantages :-
a) As the organization grows, decision making tends to become slower and more bureaucratic
b) Employees may begin to concentrate on their own unit and lose sight of the organization system
c) Accountability and performance becomes increasingly difficult to monitor ( eg ; during product
failures)
2. Product Departmentalization at the business or corporate level
Advantages :-
a) All activities associated with one product or product group can be integrated
b) Speed and effectiveness of decision making can be enhanced
c) Performance can be assessed more easily and thus improving accountability

Disadvantages :-
a) Managers may focus on their product and exclude the rest of the organization
b) Administrative costs may be high because each department will have their own specialists for
market research and financial analysts
c) Limited view or organizational view




II - Departmentalization
3. Customer Departmentalization
Advantages :-
a) Organization is able to use skilled specialists to deal with skilled customers or customer
groups
Disadvantages :-
a) Chances of a large administrative staff
b) Communication can be an issue

4. Location Departmentalization
Advantages :-
a) Organization can respond easily to customers in the various regions
Disadvantages :-
a) Larger administrative staff required
b) Communication is an issue here too
c) Duplication of functions

5. Process Departmentalization
Advantages :-
a) Reduction in time wastage as flow of work is easy and quick
Disadvantage :-
a) Larger administrative staff and hence increased cost
b) Can be used only with certain products

III- Establishing Reporting Relationships
1. Chain of Command
i) Unity of Command
ii) Scalar principle ( ultimate responsibility/ accountability)


2. Span of Management

3. Tall vs Flat Organizations

TALL FLAT
i) more communication problems as more managers i) wide span of management involved
involved hence more administrative & supervisory
responsibility

ii) more expensive as more number of people ii) high levels of morale and productivity

iii) communication with subordinates is
easy as not a complicated structure

iv) excessive workload and responsibility


IV- Distributing Authority
Authority is the legitimized power by the organization. Two specific issues requiring address here
are :-
1. The Delegation Process
The process by which a manager assigns a portion of his or her total workload to others .

.
. STEP 1 STEP 2 STEP 3
Assigning responsibilty/ Granting authority Creating Accountability
giving subordinate a job to do .





Manager
Subordinate
Subordinate
Manager
Subordinate
Manager

IV- Distributing Authority
2. Decentralization and Centralization
systematically delegating power and authority and the process of systematically retaining power
and authority

Centralization Decentralization
Environment is stable * Environment is complex, uncertain.
Lower-level managers are not as capable or * Lower-level managers are experienced at
making decisions as upper-level managers. capable and experienced at making
decisions
Lower-level managers do not want to have say * Lower-level managers want a voice in
in decisions decisions
Decisions are significant. * Decisions are relatively minor.
Organization is facing a crisis or the risk * Corporate culture is open to allowing
of company failure. managers to have a say in what happens
* Company is large.
Effective implementation of company strategies * Company is geographically dispersed.
depends on managers retaining say over what * Effective implementation of company
happens strategies depends on managers having
involvement and flexibility to make
decisions
.
Factors determining an organizations position in centralization decentralization continuum are :-
Greater environment complexity and uncertainty; tendency to decentralize
The costlier and riskier the decisions, pressure to centralize
Past history of authority distribution


.
.






V-Coordinating Activities

1. The Need for coordination there are three major types of interdependence
a) Pooled Interdependence - lowest level of interdependence
b) Sequential Interdependence one way interdependence
c) Reciprocal Interdependence both ways of interdependence


Structural Coordination Techniques are :-
a) Managerial Hierarchy
b) Rules & Procedures
c) Liaison Roles
d) Task Forces created when need for coordination is acute
e) Integrating Departments like task forces but are more permanent and hence has more
budgetary control and more authority


Electronic Coordination techniques are :-
a) Electronic schedules
b) Email
c) LAN
VI Differentiating Between Positions
Line Position
Staff Position
Situational Influences on Organizational Design
Core Technology
Unit or small batch technology
Large batch or mass production technology
Continuous process technology
Environment (mechanistic/ organic differentiation and integration)
Organizational Size and Life Cycle
Strategy
Basic Forms of Organizational Designs
1. Functional (U- Unitary) Form
* Smaller Organizations
* None of the departments can survive without the other
* This is like the functional departmentalization
* it tends to promote centralization
* promotes a functional focus rather than organizational
* CEO can oversee the functioning of smaller organizations but when operation grow this design becomes
difficult to hold


CEO


MKTG FIN R&D HR


Basic Forms of Organizational Designs
2. Conglomerate (H-Holding) Form
* corporate staff evaluates the performance of each business
* he allocates corporate resources across companies
* and shapes decisions about buying and selling
* this design is used by an organization made up of unrelated businesses.
* loosely based around product departmentalization
* each business or set of business is operated by a General Manager
* this GM functions independently of the others
* comparing and integrating unrelated products becomes difficult
* hence average to weak financial performance


CEO


Semiconductors Telecommunications Appliances Media
Basic Forms of Organizational Designs
3. Divisional (M Multidivisional)) Form
* Business with related products
* Operating within a larger organizational framework
* this design has been devised strategically
* Some activities are decentralized down to the divisional level while some are centralized at the corporate
level
* each unit is headed by a GM who has reasonable autonomy
* there is coordination between each unit
* Opportunities for coordination and shared resources are the biggest advantages of M form of design
* Basic objective of the M Form is to enhance internal competition and cooperation


CEO
( Hewlett Packard)


Computers Printers scanners Electronic equipment
Basic Forms of Organizational Designs
4. Matrix Design
* here employees are a part of the functional department and also the project department
* Representatives are chosen from each functional area to work on the new product
* at a given time the person maybe a member of many project groups
* there is flexibility of making or redefining or dissolving the group as all of them are members of the functional
team
* highly motivated and committed team members because they are involved in decision making
* provides a learning ground to concerned employees of new skills
* optimum utilization of human resources
* transition of project from project stage to functional stage is easy
* unclear reporting lines
* dealing with group behavior is a major requirement

CEO

Engg Production Fin Mktg

Project Mgr A

Project Mgr B

Project Mgr C

Basic Forms of Organizational Designs
5. Hybrid Designs
* Mix of designs
Emerging issues in Organization Design
1. Team Organizations
2. The Virtual Organizations
3. The Learning Organization
Why Do Structures Differ?

There are two extreme models of organizational designmechanistic and organic.

The mechanistic modelsynonymous with the bureaucracyhas extensive
departmentalization, high formalization, a limited information network (mostly downward),
and little participation in decision-making.

The organic model looks a lot like the boundaryless organization; it uses cross-hierarchical
and cross-functional teams, low formalization, a comprehensive information network, and
high participation in decision making.