CHAPTER – 17 – “ORGANIZATIONAL STRUCTURE & DESIGN” (Study Text)

¨ ORGANIZATION:-

An organization is: ‘a social arrangements which pursues collective goals, which controls its own performance & which has a boundary separately it from its environment.’ E,g, Multinational Co. Manufacturer, Accountancy Firm, Charity, Army, Etc.

¨ WHY DO ORGANIZATION EXISTS?

(a) Overcome people’s individual limitations
(b) Specialization
(c) Save time
(d) Accumulate & share knowledge
(e) Enable people to pool their expertise
(f) Enable synergy ----> (2+2 =5)

¨ HOW ORGANIZATION DIFFER?

- Ownership (Public Vs Private)
- Control (By owner or people working on their behalf)
- Activity (Manufacturing, healthcare, services)
- Profit or non-profit it orientation
- Size (sole trader, partnership, company)
- Legal status (Ltd. Company, partnership)
- Sources of Finance (Borrowing, Govt. funding, share issued)
- Technology (High us low)

¨ Primary Goal:- most important goal (e.g. maximizing profit)

¨ Secondary Goal:- Subordinate goals which support primary goal (e.g. increasing sales)

¨ Organization structure
“It is formed by the grouping of people into departments or sections and the allocation of responsibility & authority.”

OBJECTIVE OF ORGANIZATION STRUCTURE

Organization structure is the framework for:

- allocating task
- delegating authorities
- coordinating activity &
- channelling communication

Between individuals and groups in the organization.

Components of organization: - (By Mihizberg)

1). Structure Appex
Senior management
Ensure the org. follcuss its mission.
2). Operating Core
People directly involved in Production
Securing inputs, a processing & distributing them as output
3). Middle line
Manager
Organizing, planning & control of work
4). Techno structure
Specialist advisors & analysts
Offering technical support to the rest of the structure
5). Support staff
Administrative & concillicory support staff
Offering services, such as legal advice, research etc.

Principles of organization:- Classical approach (By henry Foyal)

1. Division of work

2. Scalar chain
Authority run from top to lattom
3. Correspondence of authority & responsibility
A person with responsibility should be given authority to do it
4. appropriate centralization
Decision should be taken at the top of organization
5. Unity of command
For any action, a subordinate should receive action from one boss only
6. Unity of direction
These should be one head & one plan for each activity.
7. Initiative
Employees should are discretion
8. subordination of individual interest
The interest of employees should not prevail over general interest of organization.
9. Discipline

10. Order

11. Stability of personnel

12. Equity

13. remuneration

14. ESIRIS De Corporation
Harmony & teamwork are essential to promote discipline & contentment.

Note: Ur work also suggested the similar set of organizing principles.

¨ MODERN APPROACHES TO ORGANIZATION:-

(a) Multi slciling
Contrary to specialization
(b) Flexibility
Smaller, multi, slcilled, temporary structure, multifunctional units, etc.
(c) Empowerment
Means to free employees from rigorous control by supervision


CONTINGENCY THEORY:

(a) Age
Older organization, more formalized its behaviour
(b) Size
Larger organization, more formalized
(c) Technology
Larger organization, more formalized
(d) Geographical dispersion

(e) Personnel employed
Formalized structure needed for law-skilled work force
(f) The type of activity the org. is involved in

(g) The organizations objective


¨ SYSTEM APPROACH:-

This approach views the organization as an open systems, which is connected to and interacts with its environment. It takes in inputs from its environment and, through various organization processes, converts them into output.

As must revision sensitive to changes in its entered environment.

¨ TALL AND FLAT ORGANIZATION:

- Spam of control:

“The spam of control refers to the non of subordinate, immediately reporting to a superior official”.

- A no. of factors influence the spam of control.

(a) A manager’s capabilities limit the spam of control.

(b) The nature of the manager’s workload.

(c) The geographical dispersions of subordinates: Dispersed terms require more effort to supervise.

(d) Subordinates work.

(e) The nature of problem.

(f) The degree of interaction between subordinates.

(g) The amount of support that supervisors received from the part of the organization or from technology.

¨ TALL ORGANIZATION:-

“A tall organization is one which, in relation to its size, has a large no. of levels of management hierarchy. This implies a narrow spam of control.”.

FLAT ORGANIZATION

‘A flat organization is one, which in relation to its size, has a small no of hierarchical levels. This implies a wide spam of control.’

TALL ORGANIZATION
FOR
AGAINST
- Narrow spam of control
- Inhibits delegation
- More participation of members in devotions
- Rigid supervision
- Large no. of promotional ladders
- Some work passes through too many hands

- Increase cost

- Slow decision making

FLAT ORGANIZATION
FOR
AGAINST
- Move delegation
- Crises management due to overwork
- Relating cheap
- Sacrifices Control
- Spread up communication




DELEGATION:-

“It is the reduction of no. of management Tevels from bottom to top.

- IT encourages delaying
- Empowerment
- Economy ----------------> Delaying reduces managerial cost
- Fashion ------------------> Flexible

¨ DEPARTMENTATIONS
1. GEOGRAPHICAL DEPARTMENTATION
Advantages
Disadvantages
- Local decision making
- Duplication or possible loss of economics of scale.
- Cheaper
- Inconsistency in methods




2. FUNCTIONAL DEPARTMENTATION
- Functional organization grouping together, pensile who do similar tasks.

Advantages
Disadvantages
(a) Expertise is pooled
(a) Focuses on internal processes rather than the customer & outputs
(b) Avoids duplication & enable economics of scale
(b) ____________ of communication
(c) Facilitates the recruitment & development of specialists
(c) Poor coordination
(d) It suits centralised business
(d) Creates vertical barriers to information & work flow rather than horizontal
3. CUSTOMER DEPARTMENTATION -> (e.g. jobbing or contacting firm)

DIVISIONALIZTION:-

‘It in the division of a business into autonomous region or product businesses, each its own revenue expenditure and capital asset purchase progress & therefore each with its own profit & loss responsibility.”

In other words, divisiondisction is on organization within an organization.

Divisiondisction can be of 2 forms:

- Subsidiary
- Department

- RULES OF DIVISIONDISCTION:-

1. Each division must have complete authority
2. Each unit must be large enough to work
3. Unit must not very of head office for excessive management work
4. Unit must have potential for growth
5. Scope & challenge in the job of each unit.
6. They should be arm’s length transaction between the units.

DIVISIONALISATION

Advantages
Disadvantages
1. Management focuses on business performance
1. Independent products are difficult to identify
2. Reduces the unprofitable products & activities being continued
2. It is only possible at a fairly senior management level
3. Encourages efficiency, lower, cost, higher profit
3. Resources problems may arise.
4. Reduces the no. of management levels
4.
HYBRID STRUCTURE:-

“Hybrid (mined) structure may involve a mix of functional departmentation, ensuring product organization, customer organization & tutorial organization.”

MATRIX STRUCTURE:-

“Matrix structure essentially ‘crosses’ functional & product ‘ project organization, so that staff in between functional or regional department are responsible:-

- To their department managers, in regard to the activities of the department
- To a product or project manager, in regard to the given product or project.

Advantages
Disadvantages
- Greater flexibility of people, work flow & decision making & tasks & structure
- Possible competition & conflict between dual managers
- Support inter-disciplinary cooperation & multi functional working
- Stress on staff caught between conflicting divided
- Encourage motivation & employed development
- Increases cost
- marker
- Slower decision making
- Horizontal work flow

NEW ORGANIZATION

(a) Flat structure
More responsive & there is a direct relationship between the organization’s strategic centre & the operational units sewing the customer.
(b) Horizontal structure
Like matrix structure
(c) Chucked & ‘Unglued structure’
E.g. KFC, where they have permanent, contractual & daily wages employees
(d) Output focused structure
E.g. project
(e) Jobless structure
E.g. A person who is multi skilled can be employed by many organization
one place many places
- centralization & decentralization

Centralized organization is one in which authority is concentrated in and place.

- Centralization can be seen in 2 ways
- Authority

- Decentralization implies increased delegation, empowerment & autonomy at lower levels of the organization.

Pro centralization
Pro decentralization/delegation
- Decisions are made at one point and are easier to coordinate
- Avoid overburdening top manager
- Wider view of problem & consequences
- Improves motivation of juniors
- Balance interest of I/f functions
- Greater awareness of local problem by decision makers
- Quality decisions
- Greater speed of decision making without need to refer back
- Cheaper
- Develop skills of junior
- Ability to take cries decision quickly
- Separate responsibilities can be identified
- Standardised policies, procedures & documentation
- Decisions are made locally
By burns & stalker

Mechanistic Organization

Stable, efficient & suitable for slow-changing operating environments.

Organic Organization:-

Flexible, adoptive & suitable for fort changing dynamic operating environments.

Please see table 6.2, pg 333

- Bureaucracy:- (By Weber)

A bureaucracy is “a continuous organization of official functions bound by rules”.

- Charteristics of bureaucracy

1. Hierarchy of roles -------> Each lower office is under control of higher one.

Specidisation
2. High degree of specialization & training

3. Professional nature of employment

4. Impersonal nature of rules & procedure

5. Rationality ------> The hierarchy of authority & office structure is clearly defined.

6. Uniformity in the performance of talk

7. technical competence ----> All officials are technically components

8. Stability -------> The Organization’s structure, tasks & culture are consistent over time, regardless of external change.


Advantages
Disadvantages
- _____ for standardized, routine task
- Slow occasion making
- Very effective
- Uniformity inhibits the personal development of staff
- Regard adherence to procedure may be necessary for fairness, safety & security (e,g, data protection)
- It suppress innovation
- Long lived organization & same people like routine work.
- Lack of feedback

- Slow changing organization

- Communication restricted


- ADHOCRACY

Adhocracy organic organization is “a type of organization design which temporary, adoptive, creative, to bureaucracy, which tends to be permanent, rule-driven & inflexible.”

- Type of production system: (by Joan Woodward)

(i) Unit Production – e.g. aircraft
No delegation & required a lot senior control
(ii) Mass Production
e.g. Making cars
(iii) Procen Production
Continuous Here the machine controls & workers monitor them large span of control e.g. cement plant

- SOCIO – TECHNICAL SYSTEM:

‘A system which is technically strong but socially accepted.’

An organization may be seen as a socio – technical system with 2 major sub-systems:

- Technology, including task organization & methods

- People & their social arrangements

- INFORMATION & COMMUNICATION TECHNOLOGY (ICT)

- ICT has created the concept of virtual teams & virtual organization which enables to share information, make joint decision & fulfill the collaborative function of a team.

- ICT has also facilitated collaboration, stimulating team working, teleconferencing, video conferencing, rietworked

- This has enabled organization to:

(a) Outsource areas of organization activity to other organization

(b) Centralized their departments to without the difficulties of supervision, communication & control

(c) Centralize their functions & services (E.g. data storage)

(d) Adopt flexible working by making expertise available across the organization.