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Organisation structure 5h
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Organisation structure 5h



Human Resources

Human Resources
By Dr. Hesham Hemaya



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    Organisation structure 5h Organisation structure 5h Presentation Transcript

    • Private property do not duplicate with out authorization Organization Structure Prepared & Presented By Dr. Hesham Hemaya
    • Learning objectives 1.Describe the two fundamental requirements of organizational structures. 2.Summarise the three main forms of coordination. 3.Explain why companies can have a wider span. 4.Advantages and disadvantages of centralization and formalization. 5.Contrast functional structures and divisional structures. 6.Outline the features and advantages of the matrix structure. 7.Describe four features of team-based organizational structures. 8.Describe the network structure. 9.Summarise the contingencies of organizational design. 10.Explain how organizational strategy relates to organizational structure.2 Human Resources Management
    • Defining organizational structure Organizational structure refers to the way tasks are divided up, how the work flows, how this flow is coordinated and the mechanisms allows this coordination to occur. The organizational chart cannot fully capture the organizational structure but gives us a place to begin when studying it.3 Human Resources Management
    • Two fundamental requirements 1. Division of labor into distinct tasks. “Note that this leads to specialization”. 2. Labor Coordination So that workers are able to work in concert to accomplish the organization goals. Coordination occurs through: a. Informal communication b. Formal hierarchy c. Standardization4 Human Resources Management
    • Forms of work coordination Informal communication •sharing information •high media-richness •important in teams Formal hierarchy •direct supervision •common in larger firms •problems −costly, slow, less popular with young staff Standardization •formal instructions •clear goals/outputs •training/skills5 Human Resources Management
    • Key Elements in Organizational Design Organizational Design is engaged when managers develop or change an organizations structure. Organizational Design is a process that involves decisions about the following six key elements: Span of control Departmentaliz Chain of ation command Organizational Structure elements Formalization specialization Division Of Labor6 Human Resources Management
    • I. Work Specialization (Division of Labor) Describes the degree to which tasks in an organization are divided into separate jobs. The main idea of this organizational design is that an entire job is not done by one individual. It is broken down into steps, and a different person completes each step. Individual employees specialize in doing part of an activity rather than the entire activity. • Necessary as company grows and work becomes more complex. • Potentially increases work efficiency. II. Departmentalization It is the basis by which jobs are grouped together. Every organization has its own specific way of classifying and grouping work activities.7 Human Resources Management
    • III. Chain of command It is defined as a continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom. There are three important concepts attached to this theory: Authority: Refers to the rights in a managerial position to tell people what to do and how to to do it. Responsibility: The obligation to perform any assigned duties. Unity of command: The management principle that each person should report to only one manager.8 Human Resources Management
    • IV. Span of Control It is important to a large degree because it determines the number of people directly reporting to the next level. Also, determines the number of employees a manager can efficiently and effectively manage. Wider span of control possible when: -Used with other coordinating methods -Subordinates tasks are similar -Tasks are routine Note: Flatter structure require wider span.9 Human Resources Management
    • Levels and span of control Members at each level ASSUMING SPAN OF 4 ASSUMING SPAN OF 8 (highest) 1 1 1 2 4 8 organisational level 3 16 64 4 64 512 5 256 4,096 6 1,024 7 4,096 Operatives: 4,096 Operatives: 4,096 Managers (levels1-6): 1,396 Managers (levels1-4): 585 Ratio of 1:4 Ratio of 1:810 Human Resources Management
    • V. Centralization and Decentralization More Centralization when More Decentralization when -Environment is complex, uncertain. -Environment is stable. -Lower-level managers are capable -Lower-level managers are not of making decisions. capable of making decisions as -Decisions are relatively minor. upper-level managers. -Corporate culture is allowing -Decisions are significant. managers to have a say in what -Organization is facing a crisis or the happens. risk of company failure. -Company is geographically -Company is large. dispersed. -Effective implementation of -Effective implementation of company strategies depends on company strategies depends on managers retaining say over what managers having involvement and happens. flexibility to make decisions11 Human Resources Management
    • VI. Formalization It refers to the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures.12 Human Resources Management
    • Overview: Two Models of Structure 1. Bureaucratic structure  Hierarchy  Tall and flat forms  Span of control  Time span of discretion 2. Horizontal differentiation (departmentalization)  By function  By product or service  By location  By customer  Bu process13 Human Resources Management
    • Bureaucracy implies: – notion of rational-legal authority – notion of „office‟ – notion of „impersonal order‟14 Human Resources Management
    • Fundamental categories of rational-legal authority are:  a continuous organisation of official functions bound by impersonal rules  a specified sphere of competence i.e., differentiation of function  the organisation of offices follows the principle of hierarchy  the separation of members of the administrative staff from ownership of production or administration  no appropriation of his/her official position by the incumbent  administrative acts, decisions and rules are formulated and recorded in writing, even in cases where oral discussion is the rule or is even mandatory15 Human Resources Management
    • Bureaucratic Organisation and Change Resistance  The ‘bureaucratic maze’  Decision avoidance  Like a jungle of weeds, bureaucracy has a tendency to persist and to re-emerge  Difficult to change  Bureaucracy is now often a negative term16 Human Resources Management
    • Mechanistic (machine-like) Structures Characteristics • High Horizontal Differentiation • Rigid Hierarchical Relationships • Fixed Duties • High Formalization • Formalized Communication Channels • Centralized Decision Authority17 Human Resources Management
    • Flat Tall In order to work, a flat structure requires thorough training for staff at each level18 Human Resources Management
    • Tall or Flat Bureaucracy? Flat bureaucracy (When) Tall bureaucracy (When)  jobs are very  If tasks are high in standardized ambiguity  decisions are  If the time span of decentralized discretion of the top  If the time span of job is very long discretion of the top job is short (20 yrs 7 levels) (1 yr 3 levels)19 Human Resources Management
    • Horizontal differentiation (departmentalization or divsionalization) Suitable during growth by creativity  By function and growth by direction stages Suitable when the company has  By product or service diversified into a number of product/service areas/divisions Common when organizations  By location operate in wide geographical area Suitable when organization is  By customer dealing with different types of customers  By process Common when organizations productivity is in multi stages20 Human Resources Management
    • There are five common forms of departmentalization: 1- Functional Departmentalization. As shown in the Figure it is a groups of jobs grouped by functions performed. It can be used in all kinds of organizations; it depends on the org. goals. Positive Aspects Negative Aspects Efficiencies from putting together Poor communication across similar specialties with common functional areas skills, knowledge, and orientations Limited view of organizational Coordination within functional area goals Is in-depth specialization21 Human Resources Management
    • 2- Product Departmentalization It groups jobs by product line. Each manager is responsible of an area within the organization depending of his/her specialization Positive Aspects Allows specialization in particular Negative Aspects products and services Duplication of functions Managers can become experts in Limited view of organizational their industry goals Closer to customers22 Human Resources Management
    • 3- Geographical Departmentalization It groups jobs on the basis of territory or geography. Positive Aspects Negative Aspects More effective in handling of Duplication of functions specific regional issues that arise Can feel isolated from other Serve needs of unique geographic organizational areas markets better23 Human Resources Management
    • 4- Process Departmentalization. It groups on the basis of product or customer flow. Negative Aspects Positive Aspects Can only be used with certain types More efficient flow of work activities of products24 Human Resources Management
    • 5- Customer Departmentalization. It groups jobs on the basis of common customers Positive Aspects Negative Aspects Customers needs and problems Duplication of functions can be met by specialists Limited view of org. goals25 Human Resources Management
    • Effects of Departmentalization •Establishes work tram and supervision structure. •Creates common resources, measures of performance, etc . •Encourage informal communication among people and subunits.26 Human Resources Management
    • More Models of Structure Suitable after the organization has  Matrix structures reach the „crisis of red tape‟ stage  Network organisations  internal network  vertical network  dynamic, loosely coupled network All of these differ from departmentalized/divisionalised structures in that they depart from the principles of hierarchy and a unitary chain of command27 Human Resources Management
    • Project-based Matrix structure FUNCTIONAL GROUPINGS Marketing Finance Personnel Operations Government Education Private Employees are temporarily assigned to a specific project and have a permanent functional units.28 Human Resources Management
    • 29 Human Resources Management
    • Stages of Matrix Structures 1. Traditional functional structures 2. Temporary overlay – short term project teams and project managers (managerial integrators) 3. Permanent overlay (permanent cross-department integrator/teams 4. Mature matrix – both bosses have equal power30 Human Resources Management
    • Features of team-based structures •Self-directed work teams •Teams organized around work processes •Very flat span of control •Very little formalization •Usually found within divisionalised (functional) structure Advantages  Speeds operational decision making  Project loyalty  Flexible use of human resources Disadvantages  Complex  Costly  Confusing  Time management31 Human Resources Management
    • Network organizational structure Internal network • These operate by using an internal market and Profit Centre Profit Centre encouraging its „businesses within the business‟ to sell to outsiders as well as to Core Company inside units. • This structure aims to Profit Centre Profit Centre inspire entrepreneurship internally without using outsourcing. Profit Centre32 Human Resources Management
    • Vertical network • These operate as a stable network of separately Distributor Distributor Franchisee 1 franchisee 2 owned vendors, clustered around a large „core‟ firm • This serves to spread risk across a number of separate players. Core firm • Together the network can support product diversity and innovation. Supplier 1 Supplier 233 Human Resources Management
    • Dynamic, loosely-coupled (organic) network Also called ‘Outsourcing based Network Organisation’ - e.g. Nike34 Human Resources Management
    • Two Generic Types of Structure Mechanistic Versus Organic Structures Mechanistic Organic Routine and repetitive Flexibility, ambiguity and challenge, working in network or matrix structures35 Human Resources Management
    • Mechanistic Vs. Organic • Highly specialized tasks • Low horizontal differentiation • Rigid departmentalization • Collaboration (vertical & lateral) • Strict chain of command • Relaxed hierarchy; free flow of • Narrow span of control information • Centralized decision making • Wide span of control • High formalization: many • Decentralized decision making detailed rules and standard • Low formalization operating procedures • Informal communication, face- • Vertical communication and reporting system to-face • Little teamwork • Teamwork • Adaptable duties36 Human Resources Management
    • Contingencies of organizational design -Organizational size -Technology -External environment Organizational strategy There is mounting evidence that, while the 3 contingencies (above) influence optimal structure organizational, strategy has primacy because it has a meditational role. Structure follows strategy.37 Human Resources Management
    • Technological contingencies Variety Refers to the amount of exceptions to standard procedure that can occur when doing a job. Analyzability Refers to the extent that the process of converting inputs to outputs can be reduced to a defined set of standardized steps.38 Human Resources Management
    • Types of organizational technology39 Human Resources Management
    • Impact of Environment on Structure Environment Institution or forces outside the organization that potentially affect the organization performance Key environment dimensions.  CAPACITY: Abundance (richness, room for growth), versus scarcity (with no room for mistakes)  VOLATILITY: Stable (not much change) versus Dynamic (unpredictable change)  COMPLEXITY: Simple (key players easy to keep track of, homogenous, concentrated) versus Complex (heterogeneous, dispersed players)40 Human Resources Management
    • Ways of describing the external environment Dynamic Stable -High rate of environmental -Regular cycles of activity, change. steady changes in supply Complex of inputs, predictable. -Many environmental Simple elements to monitor and -Few environmental consider. Vs. elements to monitor and Diverse consider. -Great variety of products Integrated or services. -One product or service. Hostile Munificent -Resource scarcity and -Plentiful resources and competition. limited competition.41 Human Resources Management
    • Org. environment and structure42 Human Resources Management
    • Org. environment and structure43 Human Resources Management
    • Impact of Environment on Structure Volatility Capacity Complexity More organic structures44 Human Resources Management
    • Factors influencing organisational structure STRATEGIC CHOICES GOALS SIZE Differentiation Philosophy and Culture ENVIRONMENT Uncertainty ORGANISATIONAL PERFORMANCE STRUCTURE TASKS & MARKET CONDITIONS Interdependence TECHNOLOGY REPUTATION & SO ON45 Human Resources Management
    • Which Structure ? Choosing how to structure an organisation is informed by questions such as these: 1- Which possible structures are suitable means to facilitate the achievement of the organisation‟s purpose and strategy? 2- Which structures can respond to the need for organisational change in the organisation‟s environment? 3- What technologies (e.g. IT) does/will the organisation use, what organisational structure forms does this go with?46 Human Resources Management
    • The Determinants of Organisational Structure PETS Environment Strategy Culture Creativity CHOICE OF Technology Politics STRUCTURE Size Leadership47 Human Resources Management
    • Choosing a Structure (Perrow) Nature of Tasks and Problems:  Routine, mass production – mechanistic structures  Engineering-type – mainly mechanistic  Craft type – mainly organic  Non-routine – organic48 Human Resources Management
    • Choosing a Structure (Chandler) Product-market Strategy Organization Structure Single product or service. Agency Local/regional markets. Limited, standardized product or service Functional line. Regional/national markets. Diversified, changing product or service Divisional line. National/ international markets. Standard and innovative products or Matrix services. Stable and changing markets. Product or service design. Global, changing Dynamic markets. network49 Human Resources Management
    • Choosing a Structure (Miles & Snow)  defenders, with narrow and stable product markets functional structure  prospectors, with diverse products, searching for market opportunities geographically divisionalized structure  analysers, with a stable basic product market plus areas of innovation where they are second or later movers matrix structures50 Human Resources Management
    • Symptoms of Inappropriate Structure  Low morale due to: - Uunacceptable decisions/decision making process - Unclear performance criteria - Conflicting expectations - Overload/lack of support  Delays in decision making  Conflict/lack of co-ordination  Failure to innovate  Escalating administrative costs51 Human Resources Management
    • Changing Structures • „Developing organisations find it difficult to change their formal structures, and cannot do so at frequent intervals. • There is usually a time lag between a change in the environment, or in task/problem type, or in strategy or in technology, on the one hand, and the subsequent change in structure on the other. • Internal power-struggle is also involves between different groups of internal stakeholders. • Culture may block change intended in restructuring.52 Human Resources Management
    • Do you have any questions ?53 Human Resources Management
    • The End54 Human Resources Management