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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. DEPARTMENTALIZATION-
FUNCTIONAL:
• …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 Conflicts-
Functional 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

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