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  • 1. Tuesday, April 29, 2014 hmftj 1 Group DetailsGroup Details ● Hmftj B-18298 ● Abdul Wahab B-18108 ● Usama Dar B-18347 ● Tariq Yaqoob B-18305 (A) Topic : “An Organizational Structure & The Design” To : Prof. Iqbal Shoukat
  • 2. Tuesday, April 29, 2014 hmftj 2
  • 3. Tuesday, April 29, 2014 hmftj 3 HistoryHistory Organizational structures developed from the ancient times of hunters and collectors in tribal organizations through highly royal and clerical power structures to industrial structures and today's post-industrial structures.
  • 4. Tuesday, April 29, 2014 hmftj 4 Difference Between OrganizationalDifference Between Organizational Structure & DesignStructure & Design Organizational structure deals with the present while design is about the future. Everyone needs to know what they're doing. Organizational structure and design help companies to understand themselves and ideally to work together to accomplish all the tasks and achieve all the goals of an organization.
  • 5. Tuesday, April 29, 2014 hmftj 5 ORG STRUCT&DESIGNORG STRUCT&DESIGN Often when a company is small and starting up, it neglects both of these concepts while it figures out its identity, tasks, functions and all of the things organizational structure and design help put in order. While structure and design are two parts of the same whole, they have some differences that managers must understand in order to best shape their businesses.
  • 6. Tuesday, April 29, 2014 hmftj 6 Organizational StructureOrganizational Structure Organizational structure is the skeleton of an organization. It is an expression of who is performing the various functions and tasks of a company and how these people relate to one another. Organizational structure encompasses a list of the various job positions, titles and duties of a business, and the reporting structure or chain of command among them. Structure is a statement of the current state of affairs, not the ideals, intentions or betterment of an organizations. Organizational structure does not include "shoulds.shoulds."
  • 7. Tuesday, April 29, 2014 hmftj 7 Organizational DesignOrganizational Design Design in an organization is much the same as for buildings, clothing and vehicles ; it's a plan. When a company's leaders develop plans for how their company should function or would perform better, they undertake the business of organizational design. Good design takes inventory of all the tasks, functions and goals of a business, and then develops groupings and orderings of job positions, departments and individuals to best and most efficiently achieve those ends. Usually, designs are expressed through an organizational chart, which helps players throughout an organization understand functions and power relationships.
  • 8. Tuesday, April 29, 2014 hmftj 8 Organizational Structure and DesignOrganizational Structure and Design Have you ever wondered why some organizations are always at the top position while some others have to struggle even for their very existence? The answer is that, successful organizations have a solid organizational structure and design than the others.
  • 9. Tuesday, April 29, 2014 hmftj 9 Organizational structure is the process of building a team of highly talented, professional, ambitious and enthusiastic individuals to achieve our set goals and targets. Effective employee management and business expansion are the main reasons for the necessity of a systematic organizational structure and design. You may face countless difficulties while starting your dream organization. The scope of the word 'organization' is very wide. An organization can be a company, a business or even a school or a college. A small business will need a simple structure, while large multinational companies or universities with several colleges under its control would need a large or complex one. Whether small or large, the first step in forming an organization is to set up a management team which will supervise the working of the entire organization. The management team includes the chairman/promoter of the organization, board of directors and non executive chairman. The mission and the vision of the organization should be defined by the management. Vision of the OrganizationVision of the Organization
  • 10. Tuesday, April 29, 2014 hmftj 10 How to Design a GoodHow to Design a Good Organizational StructureOrganizational Structure Designing the structure of an organization needs extra-ordinary management skills, dedication and perseverance. The first step involves explaining each employee, what his role will be. Employees will not be able to deliver their best, unless they are completely aware of their work and expectations. Another important thing is a system of accurate evaluation of the employee performance without being partial or unjust to any employee. Favoring some employee over the other without authentic reasons can be harmful for the company's future. There should not be concentration of power in the hands of a few executives, as this may lead to grouping and reduced quality output. Decide the number of employees needed in a particular department and recruit only those many employees. Recruiting excess number of employees can affect the financial position of the company in a negative way while recruiting less staff may cause delay in the production and marketing tasks, thus causing loss of revenue. Transparency in promotions is the highlight of a good organizational structure and design. Promotions and increments should be made strictly on the basis of merit to keep the employee faith in the organization alive. Following the above suggestions mmight help your dream of becoming a successful entrepreneur come true.
  • 11. Tuesday, April 29, 2014 hmftj 11 How to Design a GoodHow to Design a Good Organizational StructureOrganizational Structure Satisfying the needs of the employees is of prime importance as this retains the faith of the employees on the employers. The basic idea is to promote people with good leadership skills. Presence of employee grievance cell under the supervision of the human resource department can assure the employees of their security in terms of payment and position in the company. The rules and regulations set by the management should be followed by all the employees of all the departments. However, the departmental heads should have the freedom of taking certain decisions on their own and interference of people who are in no way connected to a particular decision-making process should be strictly prohibited. All departments like marketing, human resource management, accounts and finance, research and development should have independent directors, followed by assistant directors and general managers. Regional managers should be appointed for managing the affairs of a particular territory. As per the descending order, regional managers are followed by branch managers, clerks and assistant clerks.
  • 12. Tuesday, April 29, 2014 hmftj 12 Simple Organizational StructureSimple Organizational Structure A primary school or a start-up private limited company is a good example of a simple organizational structure. Apart from the management, these organizations have fewer employees as compared to the big organizations. The main advantage of a simple organizational structure is the simplicity in caring out the day-to-day activities. In a primary school, the school head can personally take care of every student's needs due to less number of students. The boss of a small firm can solve his employee's problems immediately and can personally interact with him for performance related issues. Like large organizations, small companies also have marketing department, personnel department, legal advisors and accounts department. Generally, small organizations have few branches and less annual turnover than the large ones. The ultimate power is with the head, who has the final say on any matter related to the company.
  • 13. Tuesday, April 29, 2014 hmftj 13 Types of Organizational StructuresTypes of Organizational Structures "Every company has two organizational structures: The formal one is written on the charts; the other is the everyday relationship of the men and women in the organization." - Harold S. Geneen
  • 14. Tuesday, April 29, 2014 hmftj 14 Types of Organizational StructuresTypes of Organizational Structures ● Every organization, to be effective, must have a structure. Let us first understand what an organization structure is. It is the setup that determines the hierarchy and reporting structure in an organization. ● It is represented by a drawing known as an organizational chart. There are different types of organizational structures that companies follow, depending on a variety of factors like leadership style, type of organization, geographical regions, work flow and hierarchy. ● To put it simply, an organizational structure is the plan of the hierarchy and arrangement of work. Here is a list of the different types of organizational structures.
  • 15. Tuesday, April 29, 2014 hmftj 15 Types of Organizational StructuresTypes of Organizational Structures Traditional Structures:Traditional Structures: These structures are based on functional division and departments. They are the kind of structures that follow the organization's rules and procedures to the T. They are characterized by having precise authority lines for all levels in the management. The various types of structures that fall under traditional structures are: {i}Line Structure{i}Line Structure This is the kind of structure that has a specific line of command. The approvals and orders in this kind of structure come from top to bottom in a line. Hence it is known as a line structure. This kind of structure is suitable for smaller organizations like small accounting firms and law offices. This structure allows easy decision-making and is informal in nature.
  • 16. Tuesday, April 29, 2014 hmftj 16 Types of Organazational structtureTypes of Organazational structture MeritsMerits ● ? It is the simplest kind of organizational structure. ● ? Strict authority results in a stronger discipline. ● ? Prompt decisions result in quick and effective actions. ● ? There is clarity in the structures of authority and responsibility. ● ? As the control rests with one superior, it accords him the flexibility to adjust the department. ● ? There are good career advancement prospects for individuals who deliver quality work. DemeritsDemerits ● ? There are chances of the department head being biased. ● ? Lack of specialization is a persistent problem. ● ? The department head may be burdened with lots of work. ● ? Communication only happens from top to bottom. ● ? Superiors with authority can misuse it for their benefit. ● ? Decisions are taken by a single person and can go wrong.
  • 17. Tuesday, April 29, 2014 hmftj 17 Line and Staff StructureLine and Staff Structure Though a line structure is suitable for most organizations, especially the small ones, it is not effective for larger companies. This is where the line and staff organizational structure comes into play. Line and staff structure combines the line structure where information and approvals come from top to bottom, with staff departments for support and specialization. Line and staff organizational structures are more centralized. Managers of line and staff have authority over their subordinates, but staff managers have no authority over line managers and their subordinates. The decision-making process becomes slower in this type of organizational structure because of several layers and guidelines. Also, there is formality involved. MeritsMerits It enables the employees to perform at a faster rate. It helps employees to accept responsible jobs and specialize in a particular area. It helps line managers to concentrate on the task at hand. Little or no resistance is met when organizational changes take place. It results in less operational wastage and increases productivity. Employees feel that they are given the due credit for their contribution. DemeritsDemerits Confusion may be created among employees. Employees lack operational knowledge to give result-oriented suggestions. There are too many levels of hierarchy. Employees may have differences of opinions and this may slow down the work. As staff specialists exist, it is costlier than a simple line organization. Decision-making may be time-consuming.
  • 18. Tuesday, April 29, 2014 hmftj 18 Functional StructureFunctional Structure This kind of organizational structure classifies people according to the function they perform in their professional life or according to the functions performed by them in the organization. The organization chart for a functional organization consists of a Vice President, a Sales Department, a Customer Service Department, an Engineering or Production Department, an Accounting Department, an Administration Department, etc. Merits It has high degrees of specialization. It has clear lines of authority. It facilitates easy accountability for the work. It accords a high level of speed and efficiency. The need for duplication of work is eliminated. All the functions command equal importance. Demerits Communication has several barriers which makes coordination difficult. More focus is laid on individuals rather than the organization. The decisions taken by a single person may not always work in favor of the organization. As the organization expands, it gets difficult to exercise control on its operations. There may be lack of teamwork between different departments or units. As all the functions are separated, employees may not gain knowledge about other specializations.
  • 19. Tuesday, April 29, 2014 hmftj 19 Divisional StructureDivisional Structure These are the kinds of structures that are based on different divisions in the organization. They group together employees based on the products, markets and geographical locations covered. Here is a detailed description of a divisional structure. Product Structure A product structure is based on organizing employees and work on the basis of the different products. If the company produces three different products, they will have three different divisions for these products. This type of structure can be best utilized for retail stores with a number of products. Merits Units which are not working can be closed down easily. Each unit can be operated and treated as a separate profit center. It accords rapid and easy decision-making. It also gives a lot of independence to the decision makers. Individual products get separate attention as per the problems they face. It enables the organization to have a high productivity and efficiency quotient. Demerits As each unit operates on its own, organizational goals may not be achieved. Unhealthy competition may exist among internal business units. As it has too many managerial levels, it may hamper the business. Accounting work and taxes may increase considerably. All the units may not be considered as equal. Marketing individual products may add up to the cost significantly.
  • 20. Tuesday, April 29, 2014 hmftj 20 Market StructureMarket Structure Market structure is used to group employees on the basis of the specific market theMarket structure is used to group employees on the basis of the specific market the company sells in. A company could have five different markets they use and according tocompany sells in. A company could have five different markets they use and according to this structure, each would be a separate division.this structure, each would be a separate division. Merits Employees can communicate with customers in the local language. They are available for the customers, if need is felt. The problems in a particular market can be isolated and dealt with separately. As individuals are responsible for a particular market, tasks are completed on time. Employees are specialized in catering to a particular market. New products for niche markets can be introduced. Demerits There can be intense competition among the employees. Decision-making can cause conflicts. It is difficult to determine the productivity and efficiency. All the markets may not be considered as equal. There may be lack of communication between the superiors and the employees. Employees may misuse their authority.
  • 21. Tuesday, April 29, 2014 hmftj 21 Geographic StructureGeographic Structure Large organizations have offices at different places, for example, there could be a north zone, south zone, west zone and east zone. The organizational structure, in such a case, follows a zonal structure. Merits There is better communication among the employees at the same location. Locals are familiar with the local business environment and can cater to geographical and cultural differences. Customers feel a better connection with local managers who can speak their language. A record of the work of individual markets and groups can be maintained. Decisions are taken thoughtfully and work when implemented. New products or product modifications catering to a specific area can be introduced. Demerits It may give rise to a feeling of division among the employees of the organization. There may be unhealthy competition among different zones. Core company ethics, beliefs and practices may differ from location to location. Tracing the performance and profits of each region may be time-consuming and tedious. There may be poor communication among the employees at different locations. Collaboration and cooperation between employees at different locations may not work out.
  • 22. Tuesday, April 29, 2014 hmftj 22 Matrix StructureMatrix Structure This structure is a combination of function and product structures. It combines the best of both worlds to make an efficient organizational structure. This structure is the most complex structure. It uses teams of employees to accomplish work by capitalizing on their strengths while creating weaknesses which are of functional form. The different types of matrix structures are: Weak/Functional Matrix In this type of matrix structure, a project manager is assigned to look over the cross-functional aspects of the project. However, he has a very limited authority and it is the functional manager who actually controls the inventory, resources and the project. Merits Employees are not attached to temporary staff or temporary work. The functional manager controls the project. The functional manager is responsible in case anything goes wrong. The more the project manager communicates with the employees, the better are the results. The project manager can make things happen without being in control. The decision-making rests in the hands of the functional manager. Demerits The project manager may face strong apathy from his workers. The project manager does not have complete authority. If not supervised, workers can reduce the productivity of the entire unit. The project manager is a weak authority who has no control over the employees. He has no control over workload management and task prioritization. He cannot even give a performance review.
  • 23. Tuesday, April 29, 2014 hmftj 23 A Few More OrganizationalA Few More Organizational StructuresStructures Entrepreneurial Structure The authority of such organizations oftentimes is heavily centralized and lies with one person. It only comprises two to three vertical levels and the duties of the employees overlap. It is suitable for small or new organizations where the decision of one person matters the most. It also exhibits easy responsiveness and adaptability to change in the business environment. Horizontal Organization Structure It is also known as a flat structure. In this type, there is absolutely nil or very less interference from the senior management which allows the employees to conduct their tasks smoothly. Employees are also involved in the decision-making process. As it eliminates the need for middle management, it contributes towards giving a quick response to customer feedback. However, it may not be applicable and practical for big organizations. Vertical Organization Structure It relies on the middle management to monitor and control the work of the employees. These structures have well-defined roles and responsibilities for the employees. Hence, delegating tasks to the employees becomes easier. It requires a strong leader at the top of the hierarchy as he is the one to take all the decisions. As a hierarchy exists, it ensures that the work is done in a disciplined manner.
  • 24. Tuesday, April 29, 2014 hmftj 24 Mechanistic StructureMechanistic Structure This is the most formal and the strictest kind of structure with a clear distinction in the hierarchy and roles. Hence, these structures are vertically oriented. The hierarchy of the authority is well-defined. Decision-making rests in the hands of the senior management. As a lot of bureaucracy is involved in these structures, the leaders find it difficult to deal with competition. Also, innovation oftentimes is hampered due to red-tapeism. Employees work separately and are specialists of a task.
  • 25. Tuesday, April 29, 2014 hmftj 25 Post-bureaucratic StructurePost-bureaucratic Structure This is a structure that is not bureaucratic in nature. While bureaucratic organizations are too controlled, post-bureaucratic ones offer more freedom to the employees. Though there is hierarchy, the leaders are open to new ideas. The decisions are taken after discussion and consensus is not dependent on hierarchy. This encourages employee participation, trust, personal treatment, responsibility and empowerment. This type of structure is often used in housing cooperatives and non-profit organizations. It also incorporates techniques like total quality management (TQM) and culture management. Now that you know about the various organizational structures, implement the right one based on its applicability, advantages and disadvantages. It is important to find an organizational structure that works best for the organization as a wrong setup can hamper functioning and be detrimental to organizational success.
  • 26. Tuesday, April 29, 2014 hmftj 26 Organic StructureOrganic Structure It is the exact opposite of a mechanistic organizational structure. In an organization following the organic structure, the authority is delegated and is decentralized. Hence, communication takes place laterally. There is a lot of flexibility in this type of an organization. Employees generally work together and coordinate different tasks. They are highly flexible to adapt to the changes in the external business environment.
  • 27. Tuesday, April 29, 2014 hmftj 27 Others Pre-Complex StructureOthers Pre-Complex Structure Here,I introducing few more structures namely balanced/functional matrix and strong/project matrix. In the balanced/functional matrix, the responsibility and power is shared equally by both the project manager and the functional head. This may create a power struggle between them. In the strong/project matrix, the project Manager is primarily responsible for the work while the functional head gives technical advice and allocates resources.
  • 28. Tuesday, April 29, 2014 hmftj 28 !!!!Thanks!!!! Prepared & Presented By : F.W.O.TF.W.O.T