Organization

Theories for
Effective Business
Management
two broader organizational structure :

1.Formal Organization usually

represented with organized charts and
with position descriptions. There is a
clear reporting relationship that the
manager is aware of.
2. informal organization is a set of evolving
relationships and patterns of human interaction
within an organization that actually do exist
but are not officially prescribed. Alongside
with this informal organization are the
informal leaders who sometimes exert
influence to organizational behaviour.
Organizational Design is the process of
aligning an organization’s structure based on
its vision and mission. It is a careful study at
the complex relationship between tasks,
workflows, responsibilities and authorities,
and making sure these all support the
objectives of the organizational strategy and
mandate.
There are two main classifications of
theories regarding organizational design
according to Robbins and Coulter
(2009): traditional and modern.
Traditional pertains to the usual or old-
fashioned ways, while modern refers to
contemporary or new design theories.
Traditional organizational design theories
include:
Simple
This organizational design has few
departments, wide spans of control, or a big
number of subordinates directly reporting to
a manager; has a centralized authority figure
and has very little formalization of work;
usually used by companies that start out as
entrepreneurial ventures.
This diagram of a simple structure depicts a small
start-up business, in which the simple structure is
very common, with few employees and an owner
who manages and controls the majority of the
business functions. Because there are a limited
number of employees in this landscaping company,
it is necessary for each employee to perform
multiple functions in various areas of the
organization, creating little, if any,
departmentalization.
Policies, procedures and rules are limited
in the simple structure due to the wide
span of control and limited work
specialization. Of course, once the
landscaping company expands, it will
more than likely outgrow its simple
design structure and move into a more
complex structure.
Line Organization
This is the simplest form of organizational
structure commonly adopted by small
companies. It has well-defined authority levels
in the hierarchical structure. Power flows from
the top down to different operational levels or
workers. The hierarchical structure clearly
defines authority, responsibility, and
accountability at each level.
Due to its simplicity, authority and
responsibilities are transparent and easily
traceable. Communication is fast and easy
because employees get quick feedback
and respond fast. The project manager
performs duties based on position or
authority in the hierarchy. Some
organizations don’t have this position, but
when they do, they may have little or
nothing to do.
Line & Staff
The Line and Staff Organization is a
modification of the Line Organization. Here,
functional specialists work with line
managers to guide and advise them. This
structure is more common in present-day, and
most of the larger enterprises adopt this type
of set up. The staff consists of two categories;
the general and the specialized team.
General Staff
The general staff consists of
the ordinary employees that
assist the top management.
These staff aren’t experts.
Specialized Staff
This team consists of experts that offer
services to the organization. Their roles can be
advisory, control (as in quality control), or
service (such as maintenance). The Line and
Staff Organization uses the expertise of
specialists. So the line managers become
better in several fields
Functional
This organizational design groups
together similar or related
specialties. Generally, functional
departmentalization is utilized
and put into practice in an entire
organization.
A functional org structure starts with
positions with the highest levels of
responsibility at the top and goes down
from there. Primarily, though, employees
are organized according to their specific
skills and their corresponding function in
the company. Each separate department is
managed independently.
Divisional
This organizational design is made up
of separate business divisions or
units, where the parent corporation
acts as overseer to coordinate and
control the different divisions and
provide financial and legal support
services.
This design focuses on service
lines like products, customers,
area, and time. Since they
operate as small organizations,
they're called “self-contained
structures.”
So they work independently
on divisional goals. But all
divisions collectively meet the
organizational policies and
business objectives.
This type of organization is suitable
for companies that
- Operate in different geographical
locations,
- Have chain stores with subsidiaries,
and
- Banking and insurance business
Modern organizational design theories
include:
Team Design
In team design, the entire organization is made
up of work groups or teams. It’ll come as no
surprise that a team-based organizational
structure groups employees according to (what
else?) teams––think scrum teams or tiger
teams.
A team organizational
structure is meant to disrupt
the traditional hierarchy,
focusing more on problem
solving, cooperation, and
giving employees more
control.
Matrix – Project Design
Matrix design refers to an organization design
where specialists from different departments
work on projects that are supervised by a
project manager. This design results in a
double chain of command wherein workers
have two managers – their functional area
manager and their project manager – who
share authority over them.
Boundary – less Design
This is another modern organizational design where the
design is not defined or limited by vertical, horizontal
and external boundaries. There are no hierarchical
levels that separate employees, no departmentalization,
and no boundaries that separate the organization from
customers, suppliers and other stakeholders. Virtual
organization designs are often used in this design: small
groups of full-time employees and outside specialists
are temporarily hired to work on projects.
Advantage Disadvantage
Team Design Team Design
1. ______________________ 1..______________________
2. _______________________ 2. ________________________

Matrix – Project Design Matrix – Project Design

1. ________________________
1.__________________
2. ________________________
Matrix – Project Design
1. ________________________
2. ________________________

Team Design
1. ________________________
Team Design
1. ________________________