What is Organization Design

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What is Organization Design?

A process for improving the probability that an organization will be successful.

More specifically, Organization Design is a formal, guided process for integrating the people, information and technology of an organization. It is used to match the form of the organization as closely as possible to the purpose(s) the organization seeks to achieve. Through the design process, organizations act to improve the probability that the collective efforts of members will be successful. Typically, design is approached as an internal change under the guidance of an external facilitator. Managers and members work together to define the needs of the organization then create systems to meet those needs most effectively. The facilitator assures that a systematic process is followed and encourages creative thinking.

Hierarchical Systems
Western organizations have been heavily influenced by the command and control structure of ancient military organizations, and by the turn of the century introduction of Scientific Management. Most organizations today are designed as a bureaucracy in which authority and responsibility are arranged in a hierarchy. Within the hierarchy rules, policies, and procedures are uniformly and impersonally applied to exert control over member behaviors. Activity is organized within sub-units (bureaus, or departments) in which people perform specialized functions such as manufacturing, sales, or accounting. People who perform similar tasks are clustered together. The same basic organizational form is assumed to be appropriate for any organization, be it a government, school, business, church, or fraternity. It is familiar, predictable, and rational. It is what comes immediately to mind when we discover that ...we really have to get organized! As familiar and rational as the functional hierarchy may be, there are distinct disadvantages to blindly applying the same form of organization to all purposeful groups. To understand the problem, begin by observing that different groups wish to achieve different outcomes. Second, observe that different groups have different members, and that each group possesses a different culture. These differences in desired outcomes, and in people, should alert us to the danger of assuming there is any single best way of organizing. To be complete, however, also observe that different groups will likely choose different methods through which they will achieve their purpose. Service groups will choose different methods than manufacturing groups, and both will choose different methods than groups whose purpose is primarily social. One structure cannot possibly fit all.

Organizing on Purpose

The purpose for which a group exists should be the foundation for everything its members do — including the choice of an appropriate way to organize. The idea is to create a way of organizing that best suits the purpose to be accomplished, regardless of the way in which other, dissimilar groups are organized. Only when there are close similarities in desired outcomes, culture, and methods should the basic form of one organization be applied to another. And even then, only with careful fine tuning. The danger is that the patterns of activity that help one group to be successful may be dysfunctional for another group, and actually inhibit group effectiveness. To optimize effectiveness, the form of organization must be matched to the purpose it seeks to achieve.

The Design Process
Organization design begins with the creation of a strategy — a set of decision guidelines by which members will choose appropriate actions. The strategy is derived from clear, concise statements of purpose, and vision, and from the organization’s basic philosophy. Strategy unifies the intent of the organization and focuses members toward actions designed to accomplish desired outcomes. The strategy encourages actions that support the purpose and discourages those that do not. Creating a strategy is planning, not organizing. To organize we must connect people with each other in meaningful and purposeful ways. Further, we must connect people with the information and technology necessary for them to be successful. Organization structure defines the formal relationships among people and specifies both their roles and their responsibilities. Administrative systems govern the organization through guidelines, procedures and policies. Information and technology define the process(es) through which members achieve outcomes. Each element must support each of the others and together they must support the organization’s purpose.

Exercising Choice
Organizations are an invention of man. They are contrived social systems through which groups seek to exert influence or achieve a stated purpose. People choose to organize when they recognize that by acting alone they are limited in their ability to achieve. We sense that by acting in concert we may overcome our individual limitations. When we organize we seek to direct, or pattern, the activities of a group of people toward a common outcome. How this pattern is designed and implemented greatly influences effectiveness. Patterns of activity that are complementary and interdependent are more likely to result in the achievement of intended outcomes. In contrast, activity patterns that are unrelated and independent are more likely to produce unpredictable, and often unintended results. The process of organization design matches people, information, and technology to the purpose, vision, and strategy of the organization. Structure is designed to enhance communication and information flow among people. Systems are designed to encourage individual responsibility and decision making. Technology is used to enhance human capabilities to accomplish meaningful

work. The end product is an integrated system of people and resources, tailored to the specific direction of the organization.
http://www.inovus.com/organiza.htm

Basic Principles of Organizational Design
© Copyright Jim Smith Some years ago Albert Cherns, an important figure in the Norwegian work redesign efforts highlighted some important Principles of Social and Technical Systems Design. The Principles of Organization Design have been known for 30 years in the academic and consulting community. Knowing the principles and implementing them are clearly two different things. First, I will detail the principles and following that I will highlight what has made the implementation so difficult.

1. Complementarities
How we go about restructuring needs to be compatible with what we are trying to achieve by the restructuring. The process of design must be complementary with the objectives. This means the design and implementation process is critical. If you want flexibility and participation within the work group as an output of the design, then how you go about designing the organization has to be flexible, interactive and participatory. If the completed work system will depend upon high levels of meaningful flexibility in accomplishing the work, then it is through a process of meaningful flexibility that the system needs to be built. The ―means‖ have to be complimentary with the ―ends‖. In other words, if you want a system where people assume responsibility, then people have to be responsibly involved in creating the work system or you won’t get it. We do not get participative highly effective organizations by fiat.

2. Minimal Critical Specification
New technologies require people to learn and change. These abilities have to be developed through the work itself. Therefore, specify as little as possible concerning how tasks combine into jobs and how people are to interact within jobs. The creation of a well-designed work team must involve dialogue and decisions being made by the people involved. Most teams struggle from over-structure, which is based in job descriptions and compensation schemes, which result in ―that’s not my job‖. The trick in building a team that works is to specify no more than is absolutely necessary about the task or how jobs relate to the task, or how people relate to individual jobs. To build a high performance team the rule is to FIX as little as possible. This means to identify and specify no more than what is absolutely critical. Generally the critical information is about output expected. The vision of results is very important and has to be coconstructed with the group but more than anything you want to build an organic ability to learn and change into the team.

3. Variance Control
Support and reward groups that deal with errors at the point of origin. Effective teams need the legitimacy to find out where things go wrong and deal with variance where it occurs. The goal is to minimize exporting problems to others. The assumption that is safe to make is that people know what good work looks like. Exporting problems and unsatisfied customer needs is the mark of a team that lacks options.

4. Clear Goals and Flexible Strategies
Define what is expected in terms of performance early and clearly and then support adaptations toward appropriate means by which the group can achieve ends. (Do not over-specify.) This is an adaptability principle, which recognizes that we are designing living systems rather than machines. With living systems, the same ends can be reached by different means. There are a lot of ways to solve problems and meet a customers needs. What is critical here is the definition and understanding of the end goal. The ―What‖ is to be highly specified. The ―How‖ is open to local decision and initiative. This enables learning and an increased sense of ―efficacy‖ on the part of team members. Efficacy is the sense that we are effective as a team that we can make a difference and do the job well. Efficacy is fragile and needs to be supported by continuous learning and improvement. High performance teams constantly ―tinker‖ with the means by which they accomplish their results. They seldom settle on ―one best way‖

5. Boundary Location and Control
Supervisors and managers have to grow to become more comfortable performing a role as a group resource, a beacon of coming changes and a coordinator across task group boundaries. Traditional organizations group by: time, technology or territory. The weakness of this is that boundaries interfere with the desirable sharing of knowledge and experience and so learning suffers. The consistent social-technical message is if there are supervisors, they manage the boundaries as a group resource, insuring the group has adequate resources, coordinating activities with other groups and foreseeing coming changes. More and more these resource positions are disappearing as groups become more self-regulating. Often the presence of supervisors is an indication of a lack of success in a groups design, or unwillingness at higher levels to trust based upon a poor job of building the structure. When it is done right supervisors are superfluous at best and harmful at worse.

6. Information Flow
Teams have to be deeply involved to determine what and where information is needed for selfdirection. There needs to be a management commitment to provide information for task performance and learning. Information has to be provided where it is needed for self-direction, learning, and task improvement. Control has to be subordinated to achievement.

7. Support Congruence

Goals, reward and support systems that integrate required behaviors have to be consistent. The reward and support systems have to be consistent with goals. Incentives have to be realigned to support team-based work structures. Individual based compensation systems are being modified continually to support many different team structures. Skill-based schemes and gain sharing are foundations for high performance.

8. Design and Human Values
Task and organization design has to be oriented toward improving both the technical and the human components of the organization. The process of design must address the need for variation and meaning in work. It has to take into account the needs for continuous learning, involvement in decision-making, help and support between colleagues, and meaningful relationship between work and outside society, a desirable future. A re-design enterprise will be successful only if it unites a process of organization development, which includes work restructuring combined with a planning process that is both interactive and participatory.

9. Incompletion
Design is a continuous commitment, a reiterative process. A design is a solution, which inevitably has to be changed, therefore it is critical to build learning and change ability into the team. Management has to appreciate that organization design toward high performance is a continuous process. What has to be learned is the process of design because it is a never-ending necessity. Deep in our organizations, people have to learn how to periodically re-fashion their organizational arrangements. Everything falls out of balance and has to be reviewed with an eye toward deciding upon changes necessary. In the early stages learning how to redesign is often more important than the design itself. The design will change over time and learning how to do it is a team life skill. The basic message is that if you want people to assume responsibility for the work process you have to involve them in the work redesign process itself. Responsibility is the essence of selfmanagement. To accept responsibility people have to define and make decisions. The tendency is for management to hand the operational people an output of redesign thinking done by others, and expect them to work it. Expecting also, the supervisors to supervise the implementation of a design which management has completed. The trick of organizing for real teamwork is getting everyone involved in the total systems improvement. http://managementhelp.org/organizations/design.htm

Division of Labour

Departmentalization Specialization

Unity of Command
Line of command One superior

Authority and Responsibility
Line and staff authority Authority and power

Spans of Control
Levels of control Centralization and decentralization

Contingency Factors
Environment and technology Knowledge technology: task variability & problem analyzability
http://choo.fis.utoronto.ca/FIS/Courses/LIS1230/LIS1230sharma/od1.htm

Functional Organizations
Reduces duplication of activities Encourages technical expertise Creates narrow perspectives Difficult to coordinate

Divisional Organizations
Improves decision making Fixes accountability for performance Increases coordination of functions

Hard to allocate corporate staff support Loses some economies of scale Fosters rivalry among divisions

Matrix Structures
Reinforces & broadens technical excellence Facilitates efficient use of resources Balances conflicting objectives of the organization Increases power conflicts Increases confusion & stress for 2-boss employees Impedes decision making

Lateral Relations
Dotted-line supervision Liaison roles Temporary task forces Permanent teams Integrating managers http://choo.fis.utoronto.ca/FIS/Courses/LIS1230/LIS1230sharma/od2.htm

Types of Organizational Structure:

Use functional structures when the organization is small, geographically centralized, and provides few goods and services.

When the organization experiences bottlenecks in decision making and difficulties in coordination, it has outgrown its functional structure.

Use a divisional structure when the organization is relatively large, geographically dispersed, and/or produces wide range of goods/services.

Use lateral relations to offset coordination problems in functional and divisional structures.

When the organization needs constant coordination of its functional activities, then lateral relations do not provide sufficient integration. Consider the matrix structure.

To adopt the matrix structure effectively, the organization should modify many traditional management practices. http://choo.fis.utoronto.ca/FIS/Courses/LIS1230/LIS1230sharma/od3.htm

Organization Design

Aligning Organizational Structure With Business Goals
Is your organization well-designed? And how do you know? What does a well-designed organization look like, and how does it feel to work there? And how is it different from a poorly-designed one? These are the types of questions we will explore in looking at organization design.

Many people equate organization design with an organization's structure: The words "lean" and "flat" are used to describe organization design as well as it's structure. In fact, organizational design encompasses much more than simply the structure: Organization design is the process of aligning an organization's structure with its mission. This means looking at the complex relationship between tasks, workflow, responsibility and authority, and making sure these all support the objectives of the business. Good organizational design helps communications, productivity, and innovation. It creates an environment where people can work effectively. Many productivity and performance issues can be traced back to poor organization design. A company can have a great mission, great people, great leadership, etc. and still not perform well because of poor organizational design. Take the example of a company whose sales department and production department both work well as separate units. Yet they need to communicate about customer needs and have not been organized to do so: Company performance suffers as a result. Then take the example of a company that wants to grow by acquiring new customers. Yet its sales team is rewarded for customer retention instead: Again, company performance is compromised as a result. How work is done, business processes, information sharing and how people are incentivized; all of these directly affects how well the organization performs. All of these factors are facets of the organization's design and each facet is important to organization's success. Given the importance of organizational design, why is it so often to blame for inefficiency and ineffectiveness? The reason is because organizations often evolve rather than get designed. With little or no planning and intervention, the organization design that emerges is likely to be flawed with misaligned incentives, processing gaps and barriers to good communications. Without due planning, an organization's design often takes on a hierarchical structure. This structure is common because business executives and managers are often reluctant to relinquish control. However, such structures can lack flexibility, soak up resources and under-use key people and skills. When it comes to good organization design, it's a question of getting the right balance – getting the right controls, the right flexibility, the right incentives; and getting the most from people and other key resources. In this article, we first look at types of organization design and their uses. We then look in more detail at the key facets of organization design and offer some tips on how to ensure your organization is aligned with your business objectives.

Types of Organization Structure
Most organizations are designed, or evolve, to have elements of both hierarchy and more flexible, organic structures within. (Organic structures are more informal, less complex and more "ad-hoc" than hierarchical structures. They rely on people within the organization using their initiative to change the way they work as circumstances change.)

Before looking at some of the common types of organization structure, its worth looking at what characterizes a hierarchical structure and how it contrasts with an organic structure. It's worth saying that one type of structure is not intrinsically better than another. Rather, it's important to make sure that the organization design is fit for organization's purpose and for the people within it. And the section on Making Organization Design Decisions below discusses this in more detail. Characteristic Complexity Formality Participation Hierarchical structure High – with lots of horizontal separation into functions, departments and divisions High – lots of well defined lines of control and responsibility Low – employees lower down the organization have little involvement with decision making Organic structure Usually lower – less differentiation or functional separation Lower – no real hierarchy and less formal division of responsibilities Higher participation – lower level employees have more influence on decision makers Lateral, upward, and downward communication – information flows through the organization with fewer barriers

Downward – information starts at Communication the top and trickles down to employees

Functional structures and divisional structure are both examples of hierarchical organization structures. In a functional structure, functions (accounting, marketing, HR etc) are quite separate; each led by a senior executive who reports to the CEO. The advantage can be efficiency and economies of scale where functional skills are paramount. The main disadvantage is that functional goals can end up overshadowing the overall goals of the organization. In a divisional structure, the company is organized by office or customer location. Each division is autonomous and has a divisional manager who reports to the company CEO. Each business unit is typically structured along functional lines. The advantage here relates to local results, as each division is free to concentrate on its own performance. The disadvantage is that functions and effort may be duplicated. For example, each division may have a separate marketing function, and so risk being inefficient in its marketing efforts. More organic structures include: simple, flat structures, matrix organizations and network structures: Simple Structure – Often found in small businesses, the simple organization is structure is flat. It may have only two or three levels; employees tend to work as a large team with everyone reporting to one person. The advantages are efficiency and flexibility, and responsibilities are usually clear. The main disadvantage is that this structure can hold back growth when the company gets to a size where the founder or CEO cannot continue to make all the decisions.

Matrix Structure – In a matrix structure, people typically have two or more lines of report. For example, a matrix organization may combine both functional and divisional lines of responsibility. For example, in this structure, a marketing manager may report both to the functional marketing director and the country director of the division he or she works in. The advantage is that the organization focuses on divisional performance whilst also sharing functional specialist skills and resources. The (often serious) downfall is its complexity – effectively with two hierarchies, and with the added complexity of tensions between the two. Network Structure – Often known as a lean structure, this type of organization has central, core functions that operate the strategic business. It outsources or subcontracts non-core functions which, depending on the type of business, could include manufacturing, distribution, information technology marketing and other functions. This structure is very flexible and often can adapt to the market almost immediately. The disadvantage is inevitable loss of control, dependence on third parties and the complexity of managing outsource and sub-contract suppliers.

Making Organization Design Decisions
Given the many choices of structure, how do you go about making organization design decision for your business? Different organization structures have different benefits in different situations. What matters is the overall organization design is aligned with the business strategy and the market environment in which the business operates. It must then have the right business controls, the right flexibility, the right incentives, the right people and the right resources. Here are just some of the many things that you can consider when thinking about the structure of your organization. Strategy – The organization design must support your strategy. If your organization intends to be innovative then a hierarchical structure will not work. If however, your strategy is based on low cost, high volume delivery then a rigid structure with tight controls may be the best design. Size – The design must take into account the size of your organization. A small organization could be paralyzed by too much specialization. In larger organizations, on the other hand, there may be economies of scale that can be gained by maintaining functionally specialist departments and teams. A large organization has more complex decision making needs and some decision making responsibilities are likely to be devolved or decentralized. Environment – If the market environment you work in (customers, suppliers, regulators, etc.) is unpredictable or volatile, then the organization needs to be flexible enough to react to this. Controls – What level of control is right in your business? Some activities need special controls (such as patient services in hospitals, money handling in banks and maintenance in air transport) whilst others are more efficient when there is a high degree of flexibility. Incentives – Incentives and rewards must be aligned with the business's strategy and purpose. When these are misaligned, there is a danger that units within the organization become selfserving. Using the earlier example of a company that wants to grow by acquiring new customers,

the sale team is incentivized on customer retention, and therefore is self-serving rather than aligned with the business purpose. There is much more to organization design than deciding on its structure. This list shows just some of the facets organization design that can be taken into accountin thinking about this. With each stage of growth or each change, the organization design needs to be reassessed and realigned as necessary. The list can also help you identify issues that might be causing team problems or holding back you business. - See more at: http://www.mindtools.com/pages/article/newPPM_95.htm#sthash.4aDyDNSz.dpuf

Organizational Design
Organizational Design for Strategy Execution
Poor Organizational Design often wastes hundreds or thousands of hours and millions of dollars of consulting to develop strategies, but then assume the existing organization will be able to execute them. Without proper organizational deisgn to implement your strategy, it can fall flat, wasting significant resources. Sound organizational design is the key to strategy execution and the ability to ―live out‖ your corporate values. If your organization creates innovative strategies but then struggles to translate them into action, PeopleFit can help you align your structure with your strategy through design. If you’ve thoughtfully crafted a corporate values statement but have no best practices for embedding values into operations, we will help you create them.

Organizational Design Goals
PeopleFit’s approach to providing the best overall organizational design uses the proven Requisite Organization, work-levels approach allows for the natural translation of strategy and values throughout the organization from the conceptual ideas at the executive level to the concrete procedures at the face-to-customer level. This design ensures each employee receives the level of communication and leadership they need to successfully engage in their job.

Embed Values into Operations
When organizations design a structure with exactly one role at each work level within a reporting chain, that design allows for the natural flow of work, communication, and leadership. Consequently, the conceptual corporate strategy and values written at the executive level are systematically broken into successively smaller chunks until they play out at the concrete, procedural-based face-to-customer level.

Consequences of Poor Organizational Design

When poor design results in no role existing at a needed level of work, the translation chain becomes broken, as happens in flat organizations. Conversely, when more than one role exists in a given level, the translation chain becomes too heavy, as happens in overly layered organizations. There is a requisite number of layers required to fulfill a given strategic goal.

Experience You Can Trust
You can’t afford to leave your organizational structure to default or intuition. There are validated, requisite design principles and natural laws surrounding organizational structure which will help you meet your strategy and live your corporate values. This is PeopleFit’s expertise.
Refrences: http://peoplefit.com/what-we-do/organizational-design/
Contemporary organization design The current proliferation of design theories and alternative forms of organization gives practicing managers a dizzying array of choices. The task of the manager or organization designer is to examine the firm and its situation and to design a form of organization that meets its needs. A partial list of contemporary alternatives includes such approaches as downsizing, rightsizing, reengineering the organization, team-based organizations and the virtual organization. These approaches often make use of total quality management, employee empowerment, involvement and participation, reduction in force, process innovation, and networks of alliances. Practicing managers must deal with the new technology, the temptation to treat such new approaches as fads, and their own organizational situation before making any major organizational design shifts. Reengineering the organization Reengineering is the radical redesign of organizational processes to achieve major gains in cost, time and provision of services. It forces the organization to start from scratch to redesign itself around its most important processes rather than beginning with its current form and making incremental changes. It assumes that if a company had no existing structure, departments, jobs, rules, or established ways of doing things, reengineering would design the organization as it should be for future success. The process starts with determining what customers actually want from the organization and then developing a strategy to provide it. Once the strategy is in place, strong leadership from top management can create a core team of people to design an organizational system to achieve the strategy. Reengineering is the process of designing the organization that does not necessarily result in any particular organizational form, it the process of adopting the changing behavior of the industry and business environment. Rethinking the organization Also currently popular is the concept of rethinking the organization. Rethinking the organization is also a process of restructuring that throws out traditional assumptions that companies should be structured with boxes and horizontal and vertical lines. Robert Tomasko makes some suggestions for new organizational forms for the future. He suggests that the traditional pyramid shape of organizations may be inappropriate for current business practices. Traditional structures, he contends, may have too many levels of management arranged in a hierarchy to be efficient and to respond to dynamic changes in the environment. Rethinking organizations might entail thinking of the organization structure as a dome rather than a pyramid, the dome being top management, which acts as an umbrella, covering and protecting those underneath but also leaving them alone to do their work. Internal units underneath the dome would have the flexibility to interact with each other and with environmental forces. Firms like Microsoft Corporation have some of the characteristics of this dome approach to organization design.

Global organization structure Managers in a global environment must consider not only similarities and differences among firms in different cultures but also the structural features of multinational organizations. Between-culture issues: “Between-culture issues” are variations in the structure and design of companies operating in different cultures. As might be expected, such companies have both differences and similarities. For example, one study compared the structures of 55 US and 51 Japanese plants. Results suggested that the Japanese plants had less specializations, more “formal” centralizations (but less “real” centralization), and taller hierarchies than their US counterparts. The Japanese structures were also less affected by their technology than the US plants. Many cultures still take a traditional view of organization structure not unlike the approaches used in this country during the days of classical organization theory. For example, Tom Peters, a leading US management consultant and co-author of „In Search of Excellence‟, spent sometime lecturing to managers in China. They were not interested in his ideas about decentralization and worker participation, however. Instead, the most frequently asked question concerned how a manager determined optimal span of control. Multinational company: More and more firms have entered the international arena and have found it necessary to adapt their designs to better cope with different cultures. For example, after a company achieved a moderate level of international activity, it often establishes an international division, usually at the same organizational level as other major functional divisions. For an organization that has become more deeply involved in international activities, a logical form of organization design is in the international matrix. This type of matrix arrays product managers across the product departments. A company with three basic product lines, for example, might establish three product departments (of course it would include domestic advertising, finance and operations departments as well). Foreign market managers can be designated for, say, Canada, Japan, Europe, Latin America, and Australia. Each foreign market manager is then responsible for all three of the company‟s products in his or her market. Finally, at the most advanced level of multinational activity, a firm might become an international conglomerate. Dominant themes of contemporary designs The four dominant themes of current design strategies are:

   

The The The The

effects of technological and environmental change. importance of people. necessity of staying touch with the customer. global organization.

Technology and the environment are changing so fast, and in so many unpredictable ways, that no organization structure will be appropriate for long. The changes in electronic information processing, transmission, and retrieval alone are so vast that employee relationships, information distribution, and task coordination need to be reviewed almost daily. The emphasis on productivity through people that was energized by Thomas Peters and Robert Waterman Junior in the 1980s continues in almost every aspect of contemporary organization design. In addition, Peters and Austin further emphasized the importance of staying in touch with customers at the initial stage in organization design. These popular contemporary approaches and the four dominant factors argue for a contingency design perspective. Unfortunately, there is no “one best way.” Managers must consider the impact of multiple factors, the structural imperatives, socio-technical systems, strategy, changing IT, people, global considerations, and a concern for end users on their particular organization and design the organization structure accordingly. Design issues Universal approaches— top organization design attempts to specify the one best way to structure organizations for effectiveness. Contingency approaches, on the other hand, propose that the best way to design organization structure depends on a variety of factors. Important contingency approaches to organization design centre on the organizational strategy, the determinants of structure, and strategic choice.

Initially, strategy was seen as the determinant of structure: the structure of the organization was designed to implement its purpose, goals and strategies. Taking managerial choice into account in determining organization structure is a modification of this view. The manager designs the structure to accomplish organizational goals, guided by an analysis of the contextual factors, the strategies of the organization, and personal preferences. The structural imperatives are size, technology, and environment. In general, large organizations have more complex structures and usually more than one technology. The structures of small organizations, on the other hand, may be dominated by one core operations technology. The structure of an organization is also established to fit with the environmental demands and buffer the core operating technology from uncertainties and environmental changes. Organization designs can take many forms. A mechanistic structure relies on the administrative hierarchy for communication and directing activities. In the socieo-technical systems view, the organization is an open system structured to integrate two important subsystems: the technical (task) subsystem and the social subsystem. According to this approach, organizations should structure the task, authority, reporting relationships around the work group, delegating to the group decisions on job assignments, training, inspection, rewards, and punishments. The task of management is to monitor the environment and coordinate the structures, rules, and procedures. Henry Mintzberg‟s ideal types of organization design were derived from a framework of coordinating mechanisms. The five types are simple structure, divisionalised form, machine and professional bureaucracy, and adhocracy. Most organizations have some characteristics of each type, but one is more likely to predominate. Mintzberg believed that the most important consideration in designing and organization is the fit among parts of the organization.

http://rahulingle.wordpress.com/contemporary-organization-design/

Choosing an organizational structure is an ongoing design process. In this lesson, you will learn to identify types of contemporary organizational designs, including matrix, team and network designs.

Review of Organizational Design
In some previous lessons, we discussed the fact that organizational structure refers to the type of framework a company uses to distinguish power and authority, roles and responsibilities, and the manner in which information flows through the organization. Once an organization has chosen its structure, it can move on to selecting the design. Organizational design is the process by which managers assess the tasks, functions and goals of the business, allowing them to make decisions about how to group people together to best and most efficiently achieve their objectives. If you recall, the six most common approaches to organizational design include simple, functional, divisional, matrix, team and network designs. In this lesson, you will learn to identify types of contemporary organizational designs, including matrix, team and network designs. To learn more about other design structures, make sure you also watch the lesson on traditional organizational designs, which include simple, functional and divisional designs.

Matrix Design

In an organization there may be several different projects going on at any given moment. This is certainly true at Santa's workshop. Many of these projects require a number of functional or specialized areas within the organization to work collaboratively with one another. In order to make these collaborative efforts successful the company might use the matrix organizational structure that groups employees by both function and project. The purpose of the matrix structure is to maximize the use of cross-functional teams to get work done. In this diagram, you can see how the matrix organizational structure of Santa's workshop pulls employees from each department to work on various projects. Each employee in a matrix structure will report to two different supervisors: their standard manager (of the functional department which they work in) and the project manager (who is in charge of the particular project). Project managers will essentially recruit project team members and their individual skills and expertise from various functional areas to form their project team. Members of the project team are consequently exposed to the skills and expertise of their fellow team members. This creates a unique opportunity for training across functional areas that may lead to higher productivity, better cooperation, increased flexibility, heightened accountability and improved strategic management. Once the project is completed, the project team might get dissolved, and workers from different functional areas either return to their respective area or they may get reassigned to other projects and tasks.

Team Design
There are times when things go badly at Santa's workshop and most other organizations. In this situation, an organization might adopt a team organizational design, whereby groups of employees are formed from various functional areas for the purpose of solving problems and exploring possibilities. Teams can be both horizontal and vertical. The objective of a team structure is to break down functional barriers among departments to strengthen working relationships and improve efficiency. Having a group member from each department ensures that everyone's interests are being represented during the problem-solving and decision-making processes. Unlike the matrix structure, group members brought together under a team structure only report to their department head; that is, team structures are designed to award a high level of autonomy with no formal management overseeing their work. This allows teams to work the way they want to with a high level of accountability for their performance. Teams are considered temporary and disband once the problem is solved. The team is believed to be one of the fastest ways to solve problems among various departments. The team structure represents a very collaborative way for organizations to respond quickly to customer demands without needing multi-level management approval but still ensure the representation of the best interests of all departments. If we go back to Santa's workshop, we can see how the team structure design can be used. Clearly, each of these departments needs to have a strong working relationship with one another for the smooth execution of Christmas. But, let's say for a moment that there was a breakdown in communication between the mail and shipping departments. Letters from children were coming in, but the mail department was not inputting the correct information on the shipping labels to ensure that the right toys went to the right children. As you can imagine, this would be a

Christmas disaster. By using a team structure as you see now, the breakdown in communication can quickly be discussed and resolved, ensuring that both the mail department and shipping department are able to work collaboratively on a solution.

Network Design
The final contemporary structure is network. The network design structure, also known as a lean structure, keeps the core functions of the business internal, but subcontracts or outsources non-core functions to other companies. Depending on the type of business, non-core functions could include things such as manufacturing, sales, distribution, marketing and other functions. As long as the organization can handle relinquishing some level of control, the network design structure can allow organizations to take advantage of shorter time commitments, lowered costs and greater flexibility. All of these factors, theoretically, would allow an organization to better adapt to customer demands almost immediately. If Santa's workshop was facing an approaching deadline with the likelihood of not being able to produce all of the toys it needed to fill all of the children's wish lists, Santa might choose to outsource some responsibilities to another company. One area Santa might need help with is distribution. However, Santa feels his personal delivery of gifts is a core function, making it unlikely that Santa will choose to sub-contract out that responsibility. Another area that Santa might consider outsourcing is toy building of certain types of toys - electronic ones, for example. Santa can easily send toy orders with specific design specifications to an alternative toy builder to get help in meeting the demands for this Christmas season without compromising any core functions of the organization. This diagram illustrates what it would look like if Santa used a network design structure.

Lesson Summary
Let's review. Organizational design is the process by which managers assess the tasks, functions and goals of the business to make decisions about how to group people together to best and most efficiently achieve those objectives. There are several forms of organizational design. This lesson covered contemporary designs, including matrix, team and network design structures.




The matrix organizational structure groups employees by both function and project. The purpose of the matrix structure is to maximize the use of cross-functional teams to get work done. Project managers recruit project team members and their individual skills and expertise from various functional areas to form their project team. The employee will have two supervisors while working on a project team: the project manager and their standard manager of the functional department they work in. The team organizational design arranges groups of employees from various functional areas for the purpose of solving problems and exploring possibilities. Teams can be both horizontal and vertical. The objective of team structures is to break down functional barriers among departments to strengthen working relationships and improve efficiency.



The network design structure, also known as a lean structure, keeps the core functions of the business internal, but subcontracts or outsources non-core functions to other companies. The network design structure can allow organizations to take advantage of shorter time commitments, lowered costs and greater flexibility.

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Contemporary Organizational Designs Team Structure Business Essay
It is one of the contemporary designs which is like that the organizations have only team base work assignments and follow it as to fulfill the organizational goals efficiently and effectively. The good thing about this structure is that it can achieve the goal with in the required period of time and more over it help to motivate the employers. And the only disadvantage is that there will be a problem in reporting as the chain of command will not be clearly defined in the organization as it is a team structure (RH Chenhall 2003 )

Matrix-Project Structure:
It is a structure that is project base means they assigns different projects to employees to do and as soon as they are done with their projects they move to another one but they are specialists in those areas which they are working in. advantages of this structure is that it is very flexible and can change with the environmental changes like as they using different people for different tasks they can work with in different situations and the disadvantage is that it is really difficult to find the right person for the right job like tasks and projects more over one can come up with conflicts while working with in for the projects (EW Larson 1989)

The Boundary less Structure:
As the name itself indicates that it has no boundaries, boundaries in a sense that organizations which are into e-business that is which are web based organizations. The positive factors in this kind of organizational structure is that it is highly reactive to the queries they are into more over they can solve problems related to their customers it will be highly flexible and encore low cost more over they can change with the environmental changes and customers will easily access them from their homes, more over it has some disadvantages like they should have proper securities setups for payments and all, and it’s sometimes hard to control situations and to communicate the right problem so communication difficulties are there in boundary less structure (R Leifer 1977).

Today’s Organizational Design Challenges

Keeping Employees Connected:
In today’s world the organizations are increasing rapidly and having large number of operations that required good and highly control able organizational structure, now a days the structures are so complex that it is sometimes hard to keep a record of having a span of control within the organization so it is one of the important factor to keep your employee connected and working to meet the organizational goals and targets efficiently and effectively (R Galliers 2003).

Building learning Organization:
It is one of the core factor to make your organization the best in the sense that the employee who come to work in your organization should learn something new like they should have some workshops and training sessions for them just to cope up with the environmental changes and it helps organizational to be stable and too work for long term profits and benefits with fulfilling their goals and targets efficiently and effectively (DA Garvin 1985)

IMPLEMENTATION: Key features of different factors which affect change in organizational structure in the current economic climate
The social and cultural factors prominently affect the change in the organizations, corporations should remain productive and lucrative as possible as they can. The recent economic situation is greatly affecting the purchasing power of the consumers and rapid change in the buying behavior of consumers that changes accordingly change in their lifestyle. The enormous changes took place in social and in culture and most of the consumers running towards the healthier products (AA Armenakis, SG Harris 1993).

Unilever is one of the best examples of these changes:
Unilever has good understood of society and their market globally and locally. They try to cope with the changes occur in the products like many of the people have different product needs such as slimming food, nutritional food, carbohydrate free food, and many other changes which takes place due the rapid change in consumer lifestyle. Unilever take care of its society and also involve in the societal benefits through its different products according to the society need. As Unilever manipulates in developed and in developing countries extensively where the political circumstances in different countries is sustainable that revitalize more investments. The legislation of these countries also supporting free market economy, and have little governmental intervention. Most of the economic condition is not sustainable in the recent time because recession is greatly taking its position in many countries. The European market has been shifted to a single market

therefore; it is growing rapidly the market for Unilever products. In many regions the inflation rates has been immutable hence not even contriving the prices of its products or any subsequent investment. Unilever is consistently moving with the technology, and giving quality product. Their objective is not only maximizing the profits but they are greatly anticipating their customers with loyalty, trust, good response, and content changes according to the consumer lifestyle. Unilever is leading in multifarious food products such as culinary category, soups, packet tea, spreads, margarine, ice cream, olive oil, home care products for example cleansing, hygiene products, and frozen food in Europe. They are famous for best seller of various brands. Unilever has the ability to modify products according to the consumer demands. They have the good understanding of its diverse market and they are consistently engage in innovation of the products for each of the market segment. They have the kind of culture that they also listening to the consumer demands and catering them in an efficient manner. Unilever is also focusing on social responsibility to shareholders and their employees. They are constantly growing and concentrating on the core brand. They are also demonstrating the power of rapid growth in Italy and Britain. Their market shares are successfully increasing in Africa, Middle East, and Turkey. They are giving their best on the large range of brand by considering variations in its consumers. Unilever is facing decrease in the revenues due to the strong competition. Their store brands is increasing which is threat for the company, and the business climate is getting tougher as Marks & Spencer, and Sainsbury also started high quality of eatable items. Changes in the external environmental also may present threats to the firm closely related to the government variation and their policies at which they directly targeted to the taxes because it is the major revenue generator for the country not for the company, which may effect on to their small markets and hopelessly of geographic market and their targeted consumer may change their taste and way of using it. Increasing trade barriers, variation on foreign currency also differ, and evolution of substitute products. Their customer is losing confidence and trust in their products and most of the consumers switching to reduced-fat product. Retailers are also failing to make sales by not stocking enough stock. Unilever one of the weakness is reduction in the R& D budget, their incompetency to maximize remuneration, and the inefficient management of products. Absence of certain strength in the company viewed as a weakness. Their high cost structure affects due to the import of raw material, advance technology, and which also create frequent fluctuation in foreign current. They are recently facing weak distribution channels in some countries which cause low customer retention and their inefficient management giving unsatisfactory services which have direct impact on effectiveness and unavailability of products. Unilever is facing decline demand from America. The reputed perfume, frozen food and other products is not performing up to the mark while the benchmark target is 5%. Decline in sales is due to the inflation. The organizational structure is not suitable for them. They are also facing competition from Marks & Spencer, and Sainsbury also started high quality of eatable items.

They are also focusing on the research and development in order to meet the requirements, the advance technology, and effortlessly introducing modified products so that is how their stakeholders will also satisfy.

EVALUATION: WHY BUREAUCRATIC ORGANIZATIONAL STRUTURE IS NO LONGER IMPLEMENTED:
Bureaucratic organizational structure is no longer undertaking by any organization. The new approach that is decentralization is mostly adoptable and flexible for most of the organization now-a-days. Many of the organizations involve in the partnership, mergers, and nongovernmental organization which involve diversity and lead the corporations towards the decentralization (RB Denhardt 2000)

EXPLANATION: Reasons for individuals and organizations tend to resist change:
Our whole society in turning with the change they are facing that is very natural for any individual and organization which move with the variability whether it is the external change or internal change. We are moving toward the unhealthy spending. The common list will be implemented to the common situations. When the objective is not clear the change will takes place. When there is no defining purpose of the organization there will be anxiety creates within an organization and the corporation will lead downward. It always create confusion and unrest situation. When there is a desire or passion to work for honor the organization will not face any unusual circumstances but in case of any variability in the organization their determination will lead them towards accomplishing their objectives. Organization should make its management feel that how much they respect its most important assets that is people working in the organization. The resistance to variation when there is no specific content of behavior in the organization. The organization should make standards and keep in mind its norm and morale of the workers in the organization. When there is clumsy process the people get confuse and their productivity lead them towards fatigue (MT Hannan 1984).

CONCLUSION:
Organizational structure is essentials of any organization like it is the basic design of any organization, performance of employee, satisfaction, experiences, work tasks and jobs individual personality and differences, individual are more attracted or likes to stay with organizations which attracts their personality more. Organizational structure is the one which matter most in

organization as it clarifies who has to be placed where and what duties must be done by him or her in the organization and how the goals will be met efficiently and effectively, in this whole report we studied many organizational structures and how they are implemented in all organizations and what similarities they have more over what are the differences between them which organizational structure is mostly used and which organizational structure is now not in use what are the reasons behind it. The main idea of this report is to analytically examine the organizational structure and more over to know how an organization works. Organizational structure is the main idea of how the organization works like it truly depicts the image of any organization, its norm and values, and whether they are followed or not. As today’s world is moving very rapidly and to control it the organizations have to change with the environmental changes and as simple the organizational structure is the change can be meet easily and the complex the organizational structure is the changes will be more complex. Organizational structure helps a lot ion motivating, guiding the employees to achieve the goals and targets with in the required time limit, efficiently and effectively. The organizational structure helps a lot in critically analyses of any corporation, its target, and objectives, as organizational structure also shows that it more over tells that whether the organization is formal or informal. Why Weber’s Bureaucratic organizational structure is no longer in use why organizations are moving towards decentralization. Organizational structure are barely ever, if ever completely normal. They reflect not only objectives factors such as the entity’s atmosphere, mission, size, resources, and technology, but also the knowledge and preferences of the entity’s leaders and the compromises through which internal power struggles have been resolved. Organizational structure more over helps a lot in motivating employees as if the chain of command and unity of command exists in the organization as they will be knowing who to report and when to report, organizations having not clearly defined structures suffer a lot regarding who to report and who is the person we are working for. After doing this report I believe that organizational structure matters a lot in any organization as it is the main key to any organization and how it is working and achieving its goals efficiently and effectively. More over organizations should build up a good organizational structure which should be simple and easy to follow as it would be more profit generating and completing the tasks with in the required given time.

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