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Organization structure & design by arun verma

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  • introduces the key components of an organization’s human resources management process.

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  • 1. Organizational Structure and Design
  • 2. Defining Organizational Structure
    • Organizational Structure
      • The formal arrangement of jobs within an organization
    • Organizational Design
      • A process involving decisions about six key elements:
        • Work specialization
        • Departmentalization
        • Chain of command
        • Span of control
        • Centralization and decentralization
        • Formalization
  • 3. Purposes of Organizing
    • Divides work to be done into specific jobs and departments
    • Assigns tasks and responsibilities associated with individual jobs
    • Coordinates diverse organizational tasks
    • Establishes relationships among individuals, groups, and departments
    • Establishes formal lines of authority
    • Allocates organizational resources
    • Cluster jobs in to units
  • 4. Designing Organizational Structure
    • Work Specialization
      • The degree to which tasks in the organization are divided into separate jobs with each step completed by a different person
  • 5. Departmentalization by Type
    • Functional
      • Grouping jobs by functions performed
    • Product
      • Grouping jobs by product line
    • Geographical
      • Grouping jobs on the basis of territory or geography
    • Process
      • Grouping jobs on the basis of product or customer flow
    • Customer
      • Grouping jobs by type of customer and needs
  • 6. Functional Departmentalization Plant Manager Manager, Manufacturing Manager, Human Resources Manager, Accounting Manager, Engineering Manager, Purchasing + Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations + Coordination within functional area + In-depth specialization – Poor communication across functional areas – Limited view of organizational goals
  • 7. Geographical Departmentalization Vice President for Sales Sales Director, Central Region Sales Director, Southern Region Sales Director, Western Region Sales Director, Eastern Region + More effective and efficient handling of specific regional issues that arise + Serve needs of unique geographic markets better – Duplication of functions – Can feel isolated from other organizational areas
  • 8. Product Departmentalization + 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 Source: Bombardier Annual Report. CEO . Truck Division Car Division Bus Division
  • 9. Process Departmentalization + More efficient flow of work activities – Can only be used with certain types of products Plant Manager Spinning Dyeing Weaving Fininshing
  • 10. Customer Departmentalization + Customers’ needs and problems can be met by specialists – Duplication of functions – Limited view of organizational goals Director of Sales Manager, Wholesale Accounts Manager, Retail Accounts Manager, Government Accounts
  • 11. Organizational Structure (cont’d)
    • 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
  • 12. Organizational Structure (cont’d)
    • Authority
      • The rights inherent in a managerial position to tell people what to do and to expect them to do it
    • Responsibility
      • The obligation or expectation to perform. Responsibility brings with it accountability (the need to report and justify work to manager’s superiors)
    • Unity of Command
      • The concept that a person should have one boss and should report only to that person
    • Delegation
      • The assignment of authority to another person to carry out specific duties
  • 13. Organizational Structure (cont’d)
    • Line and Staff Authority
      • Line managers are responsible for the essential activities of the organization, including production and sales. Line managers have the authority to issue orders to those in the chain of command
        • The president, the production manager, and the sales manager are examples of line managers
      • Staff managers have advisory authority, and cannot issue orders to those in the chain of command (except those in their own department)
  • 14. Organizational Structure (cont’d)
    • Span of Control
      • The number of employees who can be effectively and efficiently supervised by a manager
      • Width of span is affected by:
        • Skills and abilities of the manager and the employees
        • Characteristics of the work being done
        • Similarity of tasks
        • Complexity of tasks
        • Physical proximity of subordinates
        • Standardization of tasks
        • Sophistication of the organization’s information system
        • Strength of the organization’s culture
        • Preferred style of the manager
  • 15. Organizational Structure (cont’d)
    • Centralization
      • The degree to which decision making is concentrated at a single point in the organization
        • Organizations in which top managers make all the decisions and lower-level employees simply carry out those orders
    • Decentralization
      • The degree to which lower-level employees provide input or actually make decisions
      • Employee Empowerment
        • Increasing the decision-making discretion of employees
  • 16. Organizational Structure (cont’d)
    • 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
  • 17. Organizational Design Decisions
    • Mechanistic Organization
      • A rigid and tightly controlled structure
        • High specialization
        • Rigid departmentalization
        • Narrow spans of control
        • High formalization
        • Limited information network (mostly downward communication)
        • Low decision participation by lower-level employees
    • Organic Organization
      • Highly flexible and adaptable structure
        • Nonstandardized jobs
        • Fluid team-based structure
        • Little direct supervision
        • Minimal formal rules
        • Open communication network
        • Empowered employees
  • 18. Mechanistic Versus Organic Organization Mechanistic • High Specialization • Rigid Departmentalization • Clear Chain of Command • Narrow Spans of Control • Centralization • High Formalization Organic • Cross-Functional Teams • Cross-Hierarchical Teams • Free Flow of Information • Wide Spans of Control • Decentralization • Low Formalization
  • 19. Structural Contingency Factors (cont’d)
    • Strategy and Structure
      • Achievement of strategic goals is facilitated by changes in organizational structure that accommodate and support change
    • Size and Structure
      • As an organization grows larger, its structure tends to change from organic to mechanistic with increased specialization, departmentalization, centralization, and rules and regulations
  • 20. Structural Contingency Factors (cont’d)
    • Technology and Structure
      • Organizations adapt their structures to their technology
      • Routine technology = mechanistic organizations
      • Non–routine technology = organic organizations
  • 21. Structural Contingency Factors (cont’d)
    • Environmental Uncertainty and Structure
      • Mechanistic organizational structures tend to be most effective in stable and simple environments
      • The flexibility of organic organizational structures is better suited for dynamic and complex environments
  • 22. Organizational Designs
  • 23. Common Organizational Designs
    • Traditional Designs
      • Simple Structure
        • Low departmentalization, wide spans of control, centralized authority, little formalization
      • Functional Structure
        • Departmentalization by function
          • Operations, finance, human resources, and product research and development
      • Divisional Structure
        • Composed of separate business units or divisions with limited autonomy under the coordination and control of the parent corporation
  • 24. Organizational Designs (cont’d)
    • Contemporary Organizational Designs
      • Team Structures
        • The entire organization is made up of work groups or self-managed teams of empowered employees
      • Matrix Structures
        • Specialists for different functional departments are assigned to work on projects led by project managers
        • Matrix participants have two managers
      • Project Structures
        • Employees work continuously on projects, moving on to another project as each project is completed
  • 25. A Matrix Organization in an Aerospace Firm Design Engineering Manufacturing Contract Administration Purchasing Accounting Human Resources (HR) Design Group Alpha Project Manufacturing Group Contract Group Purchasing Group Accounting Group HR Group Design Group Beta Project Manufacturing Group Contract Group Purchasing Group Accounting Group HR Group Design Group Gamma Project Manufacturing Group Contract Group Purchasing Group Accounting Group HR Group Design Group Omega Project Manufacturing Group Contract Group Purchasing Group Accounting Group HR Group
  • 26. Organizational Designs (cont’d)
    • Contemporary Organizational Designs (cont’d)
      • Boundaryless Organization
        • A flexible and an unstructured organizational design that is intended to break down external barriers between the organization and its customers and suppliers
        • Removes internal (horizontal and vertical) boundaries
        • Eliminates external boundaries
  • 27. Organizational Designs (cont’d)
    • Learning Organization
      • An organization that has developed the capacity to continuously learn, adapt, and change through the practice of knowledge management by employees
      • Characteristics of a learning organization:
        • An open team-based organization design that empowers employees
        • Extensive and open information sharing
        • Leadership that provides a shared vision of the organization’s future; support; and encouragement
        • A strong culture of shared values, trust, openness, and a sense of community
  • 28. Co-ordination
    • Linking of two or more organizational members and/or work units so that they function well together
    • Two main types of co-ordination are:
      • Vertical coordination
      • Horizontal Coordination
  • 29.
    • Vertical Coordination:
    • Linking work units (individual, team, departments) separated by hierarchical level
    • Horizontal Coordination:
    • Linking work units (individual, team, departments) at the same hierarchical level
  • 30. Techniques for effective coordination
    • Coordination by chain of command
    • Coordination by leadership
    • Coordination by committees
    • Staff meetings
    • Special Coordinators
    • Self- coordination
  • 31. Differentiation
    • Differences in attitudes and working styles, arising naturally among members of different departments, that can complicate coordination of an organization's activities.
  • 32. Integration
    • The degree to which members of various departments work together in a unified manner.
  • 33. A B Power The ability to exert influence; that is, the ability to change the attitudes or behavior of individuals or groups . A capacity that A has to influence the behavior of B so that B acts in accordance with A’s wishes. Dependency B’s relationship to A when A possesses something that B requires.
  • 34. Coercive Power A power base dependent on fear. Reward Power Compliance achieved based on the ability to distribute rewards that others view as valuable Legitimate Power The power a person receives as a result of his or her position in the formal hierarchy of an organization.
  • 35. Expert Power Influence based on special skills or knowledge. Referent Power Influence based on possession by an individual of desirable resources or personal traits.
  • 36. Dependency: The Key To Power
    • The General Dependency Postulate
      • The greater B’s dependency on A, the greater the power A has over B.
      • Possession/control of scarce organizational resources that others need makes a manager powerful.
      • Access to optional resources (e.g., multiple suppliers) reduces the resource holder’s power.
    • What Creates Dependency
      • Importance of the resource to the organization
      • Scarcity of the resource
      • Nonsubstitutability of the resource
  • 37. Authority (mainly) derives from role
    • Authority is “ the right to make an ultimate decision, and in an organisation it refers to the right to make decisions which are binding on others ” (Obholzer, 1994).
  • 38. Line & Staff Authority
    • Line authority is the relationship in which a superior exercises direct supervision over a subordinate
    • Staf f relationship is advisory
  • 39. Difference between Authority & Power
    • Power
    • Authority
    • It is a ability to command & influence behavior of another
    • It rests with persons, in their individual capacities
    • It doesn't follow any hierarchy
    • Power, being personalized attribute, can not be delegated
    • Emerges because of personal factors
    • May exist between any 2 persons
    • It is institutional right to command
    • It lies in managerial position
    • It is hierarchical in nature
    • It can be delegated
    • Institutional & originates from structural relationship
    • Superior-subordinate relationship
  • 40. Delegation
    • Transfering formal authority from one position to another is known as delegation
  • 41. Assign Tasks Transfer task responsibility Creation of responsibility Acceptance Condition Accept Reject
  • 42. Blocks to effective delegation
    • Factors in delegator:
      • Love for authority
      • Maintenance of tight control
      • Fear of subordinates growth
      • Fear of exposure
      • Attitude towards subordinates
      • Personality of superior
  • 43. Guides for Overcoming Weak Delegation
    • Define assignments and delegate authority in light of results expected
    • Select the person in light of the job to be done
    • Maintain open lines of communication
    • Establish proper controls
    • Reward effective delegation and successful assumption of authority
  • 44. Definition of Staffing
    • Staffing is filling, and keeping filled, positions in the organization structure
  • 45. SITUATIONAL FACTORS AFFECTING STAFFING
    • External factors include the level of education, the prevailing attitudes in society (such as the attitude toward work), the many laws and regulations that directly affect staffing, the economic conditions, and the supply of and demand for managers outside the enterprise
  • 46. SITUATIONAL FACTORS AFFECTING STAFFING – cont.
    • Internal factors that affect staffing include, for example, organizational goals, tasks, technology, organization structure, the kinds of people employed by the enterprise, the demand for and the supply of managers within the enterprise, the reward system, and various kinds of policies
  • 47. Environment Environment Decruitment Recruitment Human Resource Planning Selection Orientation Training Performance Management Career Development Compensation and Benefits Identification and Selection of Competent Employees Adapted and competent employees with up-to-date skills and knowledge Competent and high-performing employees who are capable of sustaining high performance over the long term