Organizational Structure and Design

ORGANIZATIONAL STRUCTURE and DESIGN

ORGANIZATIONAL STRUCTURE
• ORGANIZING The Process of Creating an Organization’s Structure • ORGANIZATIONAL STRUCTURE How Job Tasks are Formally Divided, Grouped, and Coordinated • ORGANIZATIONAL DESIGN
A process that involves decisions about Six Key Elements;

ORGANIZATIONAL STRUCTURE Organizational Design Six key Elements 1. Work Specialization
-Division of Labor -The Degree to which Tasks/ Activities in an organization are divided into Separate Jobs. -A Job is broken down in Steps and each Step is done by a different person

1. Work Specialization
• Human Diseconomies from Specialization came to be known as BOREDOM, FATIGUE, STRESS, LOW PRODUCTIVITY, POOR QUALITY, INCREASED ABSENTEEISM and HIGH TURNOVER

ORGANIZATIONAL STRUCTURE

Organizational Design
2. DEPARTMENTALIZATION • It is the basis of grouping of Jobs
• Ways of Classifying and Grouping Work Activities • 1. FUNCTIONAL: • Groups Jobs by Functions Performed. • It is the most popular way to GROUP ACTIVITIES

2. DEPARTMENTALIZATIONFUNCTIONAL:
• …Can be Used in ALL types of Organizations, Only the Functions Change to Reflect the Organization’s Activies

ORGANIZATIONAL STRUCTURE

Organizational Design
3. PRUDUCT • Departmentalization: Groups Jobs by the Type of Product or Product Line. • The major Advantage is the Increased ACOUNTABILITY for product PERFORMANCE

ORGANIZATIONAL STRUCTURE
4. PROCESS • Groups jobs on the basis of Product Flow • Each Dept. is Specializes in ONE SPECIFIC PHASE of PRODUCTION • It can also be Used for processing CUSTOMERS as well as products

5. GEOGRAPHICAL … • Groups jobs on the basis of Territory or Geography 6. CUSTOMER • Groups jobs on the basis of Common Customers • Microsoft- organized around Four Customer Markets; Consumers, Businesses, Large Corporations, Software Developers

ORGANIZATIONAL STRUCTURE

Organizational Design
3. CHAIN OF COMMAND
It is the Continuous Line of Authority that extends from upper organizational level to lower levels and CLARIFIES Who Reports to Whom.

• Authority and Unity of Command • These concept do not have Substantial Relevance today because of Advancements in Information Technology and Trend toward Empowering Employees

ORGANIZATIONAL STRUCTURE

Organizational Design
4. SPAN OF CONTROL
Number of employees a manager can Efficiently an Effectively Manage

• The Wider or Larger the Span, The more Efficient the Organization

ORGANIZATIONAL STRUCTURE

Organizational Design
7. FORMALIZATON the extent to which employee behavior is Guided by Rules and Procedures

ORGANIZATIONAL STRUCTURE

Organizational Design
5. CENTERLIZATION The degree to which decision making is concentrated at a single point in the organization

6. DECENTERLIZATION The degree to which Lower level employees provide input or actually make decision

ORGANIZATIONAL STRUCTURE

Organizational Design
Two models of Organizational Design 1. MECHANISTIC This organization is a Rigid, and Tightly Controlled Structure and Characterized by High Specialization Rigid Departmentalization Narrow Span of Control High Formalization and Little Participation in decision making by the lower-level employees.

Two models of Organizational Design

1. MECHANISTIC
• This organization has Rigid, and

Tightly Controlled Structure and
Characterized by High Specialization Rigid Departmentalization Narrow Span of Control High Formalization and Little Participation in decision making by the lower-level employees

ORGANIZATIONAL STRUCTURE Organizational Design

2. ORGANIC ORGANIZATION Highly Adaptive and Flexible
• • • • • • Cross-Functional Teams Cross Hierarchical Teams Free flow of Information Wide span of control Decentralization Low Formalization

ORGANIZATIONAL STRUCTURE Organizational Design • CONTIGENCY FACTORS

What an appropriate structure of an organization should be depends on Four Contingency factors:

1. Organization’s Strategy 2. Size 3. Technology 4. Degree of Environmental Uncertainty

ORGANIZATIONAL STRUCTURE Organizational Design 1. STRATEGY and STRUCTURE:
• • Structure should Follow Strategy It must facilitates the Achievement of Organizational Goals

2. SIZE AND STRUCTURE

ORGANIZATIONAL STRUCTURE Organizational Design 3. TECHNOLOGY and STRUCTURE a. Unit Production b. Mass Production c. Process Production

ORGANIZATIONAL STRUCTURE Organizational Design 4. ENVIRONMENTAL UNCERTAINTY and STRUCTURE
The greater the uncertainty, the more an organization needs FLEXIBILITY which is offered by the Organic organization

ORGANIZATIONAL STRUCTURE Organizational Design
TRADITIONAL ORGANIZATIONAL DESIGNS

1. SIMPLE STRUCTURE:
A. Low Departmentalization b. Wide Span of Control c. Authority Centralized in a Single person d. Little Formalization

ORGANIZATIONAL STRUCTURE
TRADITIONAL ORGANIZATIONAL DESIGNS

2. BUREAUCRACY
• Highly Routine Operating Tasks Achieved through -Specialization -Very Formal Rules & Reg.. -Tasks Grouped into Functional Depts. -Centralized Authority -Narrow Span of Control -Decision making follows Chain of Command

ORGANIZATIONAL STRUCTURE: Bureaucracy
• The primary Strength lies in its Ability to Perform Standardized Activities in a highly Efficient Manner • Putting Like Specialists together in Functional Depts. Results in economies of scale • Minimum duplication of Personnel and Equipment

ORGANIZATIONAL STRUCTURE: Bureaucracy
• Works best with Less Talented- Low/Middle Level Managers • Greater prevalence of Rules and Regulations Substitutes Managerial Discretion • Little need for Innovative and Experienced Decision makers below the Senior Executives • Specialization creates Subunits ConflictsFunctional Unit goals Override the overall goals of the org.

ORGANIZATIONAL STRUCTURE
MATRIX STRUCTURE • Combines two forms of departmentalization: Functional and Product • It attempts to gain the Strengths of Each, while Avoiding their Weaknesses • It Breaks the Unity of command concept- Dual Chain of command

MATRIX STRUCTURE
• It has Ability to Facilitate coordination When the organization has a multiplicity of complex and Interdependent activities • The dual line of Authority reduce the Tendencies of departmental members to become so busy protecting their interests over the organization’s overall goals.

NEW DESIGN OPTIONS
TEAM STRUCTURE • Management uses Teams as Coordination Device • It breaks down departmental barriers and decentralizes Decision making to the level of the Work Team

NEW DESIGN OPTIONS
• • VIRTUAL ORGANIZATION They are small organizations that OUTSOURCE major business functions It is highly Centralized, with little or no Departmentalization Movie Making orgs. Reduces long-term risks, because there is no long term- a team Assembled for a Finite period and then Disbanded

NEW DESIGN OPTIONS
BOUNDARYLESS ORGANIZATION • Breaking down the External Barriers bt. The
company and its Customers and Suppliers • It seeks to Eliminate the Chain of Command Have Limitless Span of Control Replace departments with Empowered Teams

ORGANIZATION DESIGN AND EMPLOYEE BEHAVIOR
• Work Specialization contributes to higher employee Productivity but at the price of Reduced Job Satisfaction - But Individual differences prevail • The negative behavioral outcomes from high specialization are most likely to surface in Professional jobs occupied by individuals with High Needs for Personal Growth and Diversity

ORGANIZATION DESIGN AND EMPLOYEE BEHAVIOR
• Relationship bt.Span of Control and Employee Performance - Individual Differences Prevail • However there is some evidence that A Manager’s Job Satisfaction increases as the Number of Employees Supervised Increases

ORGANIZATION DESIGN AND EMPLOYEE BEHAVIOR
• There is strong evidence linking Centralization and Job Satisfaction • Less Centralized orgs. Have a Greater amount of Participative Decision Making which is positively Related with Job Satisfaction

ORGANIZATION DESIGN AND EMPLOYEE BEHAVIOR
• The Decentralization- Satisfaction relationship is Strongest with employees who have LOW SELF-ESTEEM • They have less confidence in their abilities • They place higher value on shared decision making- thus to share Responsibilities