Organizational Structure

Presented by: Deepak Agrawal (08MTHYD023)

Is it related to your behavior???

How you form a group.. How you sit in a group.. How you react at any situation.. How you respect position.. How much freedom you have.. How much authority and responsibilities you have.. How much power you have.. If Yes Then obviously Organization structure also lead to individual(employee) behavior.
Organizational Structure

FLOW of Presentation
Elements that define organizations structure Different Organizational Designs
Three traditional organizational designs

Simple, Bureaucracy, Matrix structure

Some new design options

Team Structure, Virtual Organization, Boundaryless organization

Contrast Mechanistic and organic structure

Influencing factors
Strategy, Organization size, Technology, Environment

Organizational Design and Employee Behavior

Organizational Structure

Defining Organizational Structure

Organizational Structure
defines how job tasks are formally divided, grouped, and coordinated.

Organizational Design
A process involving decisions about six key elements:

Work specialization
Departmentalization Chain of command Span of control Centralization and decentralization Formalization

Organizational Structure

Organizational Structure (1)

Work Specialization
The degree to which tasks in the organization are sub-divided into separate High jobs with each step completed by a different person.
Productivity

Low

Work Specialization

High

Overspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover.
Organizational Structure

Organizational Structure (2)

Departmentalization by Type
Functional
Grouping jobs by functions performed

Process
Grouping jobs on the basis of product or customer flow

Product
Grouping jobs by product line

Customer
Grouping jobs by type of customer and needs

Geographical
Grouping jobs on the basis of territory or geography

Organizational Structure

2.1- Functional Departmentalization

Advantages

Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations
Coordination within functional area In-depth specialization Disadvantages

Poor communication across functional areas

Limited view of organizational goals
Organizational Structure

2.2- Product Departmentalization

LG

Home Appliances

Computers

Telecom devices

Television

Refrigerat or

Washing Machine

Laptop

Desktop

Mobile

Fixed line phone

Keyboard

Speaker

Accessori es

+ + +

Allows specialization in particular products and services Managers can become experts in their industry Closer to customers Duplication of functions Limited view of organizational goals

Organizational Structure

2.3- Geographical Departmentalization

Advantages More effective and efficient handling of specific regional issues that arise Serve needs of unique geographic markets better Disadvantages Duplication of functions Can feel isolated from other organizational areas

Organizational Structure

2.4- Process Departmentalization

RTO Office

Accounts

Registrati on

Vehicle Check

Driving test

Processin g

Approval

Dispatch

New Registrati on

Penalty

+ More efficient flow of work activities Can only be used with certain types of products

Organizational Structure

2.5- Customer Departmentalization

+ Customers needs and problems can be met by specialists - Duplication of functions

- Limited view of organizational goals

Organizational Structure

Organization Structure (3)

Chain of Command
The continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to whom.

Authority
The rights inherent in a managerial position to tell people what to do and to expect them to do it.

Unity of Command
The concept that a person should have one boss and should report only to that person.

Organizational Structure

Organization Structure (4)

Span of Control
The number of employees who can be effectively and efficiently supervised by a manager.

Organizational Structure

4.1- Span of Control

Width of span is affected by:
Skills and abilities of the manager

Employee characteristics
Characteristics of the work being done Similarity of tasks

Complexity of tasks
Physical proximity of subordinates Standardization of tasks

Organizational Structure

Organization Structure (5)

Centralization
The degree to which decision-making is concentrated at a single point in the organizations.
Reduced information overload on upper managers. Increased motivation and accountability throughout organization. Fewer managers; lower bureaucratic costs.

Decentralization
Organizations in which decision-making is pushed down to the managers who are closest to the action.
Easier coordination of organizational activities. Exercise of strong leadership in crisis. Faster decision making and response.

Organizational Structure

Organization Structure (6)

Formalization
The degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures.
Highly formalized jobs offer little discretion over what is to be done. Low formalization means fewer constraints on how employees do their work.

Organizational Structure

Part-2

DIFFERENT ORGANIZATIONAL DESIGNS

Organizational Structure

Traditional Structures
Simple structure

Low departmentalization, Wide spans of control, Centralized authority, Little formalization Flat Organization (2 or 3 vertical levels)

Strengths
Simple Fast and flexible Inexpensive to maintain Clear accountability

Owner

Weaknesses

Sales Person1

Sales Person2

Sales Person3

Cashier

Stock Keeper

Delivery Boy

Information Overload at top Slower decision making if large Dependency on one figurehead
Organizational Structure

Traditional Structures
The Bureaucracy

High departmentalization by function, Narrow span of control, Centralized authority, High formalization

Strengths
Efficiency to perform standardized tasks Economies of scale Minimum duplication of personnel & equipment Cost advantage by less talent hunting

Weaknesses
Subunit Conflicts (Bureaupathologies) Fails to take environment into account Is less effective during change or turbulence, requiring flexibility and action Ignores interpersonal relationships

Organizational Structure

Traditional Structures
The Matrix structure

Departmentalized by both functions and products, No unity of command

Strengths
Strength of both function and product departmentalization Better and direct communication Two-boss More Flexibility employee Reduce Bureaupathologies Maximizes use of employees skills

Weaknesses
Dual chain of command Power struggle Role conflict Less predictability

Organizational Structure

New Design Options

Team structures

The entire organization is made up of work groups or selfmanaged teams. Require Generalists as well as specialists employee No departmentalization, Decentralized

Strengths
Flexibility Empowered employees Reduced barriers among functional areas (Cross-functional)

Weaknesses
No clear chain of command Pressure on teams to perform

Organizational Structure

New Design Options

Virtual Organization

A small core organization that outsources its major business functions in order to concentrate what it does best. Highly centralized, no departmentalization Only coordination and controlling relationships

Strengths
Choosing best alternatives always Best for finite period existence (e.g. Olympics) Maximum flexibility

Weaknesses

Reduces managements control over key parts

Organizational Structure

New Design Options

Boundaryless Organization (Concept)

It behaves more like an organism encouraging better integration among employees and closer partnerships with Stakeholders. No chain of command, limitless spans of control

Strengths
Highly flexible and responsive Draws on talent wherever its found Cross hierarchical team, Cross functional team No external boundaries

Weaknesses
Lack of control Communication difficulties

Organizational Structure

Part-3

ORGANIZATION DESIGN DECISIONS

Organizational Structure

Organizational Design Decisions

A rigid and tightly controlled structure

Highly flexible and adaptable structure

High specialization
Rigid departmentalization Clear chain of command Narrow spans of control

Cross functional team

Cross hierarchical team Free flow of information Wide spans of control

High formalization
Centralization Limited information network (downward)

Less formalization
Decentralization Free flow of information

Organizational Structure

Contingency Factors
Structural decisions are influenced by:

Imitation Strategy

Cost-minimization Larger

Strategy Size

Innovation Smaller

Routine Stable

Technology

Non-routine Dynamic

Environment Simple
Organizational Structure

Complex

Organization Structure and Employee Behavior Moderated by

Individual Differences and cultural norms
Associated with

Strategy Size Technology Environment

Structural Designs
Mechanistic Organic

Performance and Satisfaction

Causes
Determinants
Organizational Structure

Outcome

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