Foundations of organization structure


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Foundations of organization structure

  1. 1. Foundations of Organization Structure
  2. 2. Group Members Umer Farooq-010 Mati-ur-Rehman-015 Muhammad Usman-003 Mian Sahib-088 BS(IT) 5th Semester
  3. 3. Organization Structure • How jobs are formally divided , grouped , and coordinated. • There are six key elements for the design of organization structure. – – – – – – Work Specialization Departmentalization Centralization and Decentralization Formalization Span of Control Chain of Command
  4. 4. Elements of Organizational Structure Work Specializ ation Departme ntalizati on Formaliz ation Organizational Structure Elements Centraliz ation & Decentra lization Chain of Command Span of Control
  5. 5. Work Specialization • Assign wok according to Work specialization • Division of labor • Activities subdivided into separate jobs • Consume less time to understand tools and equipments • Increase efficiency of work
  6. 6. Departmentalization • The basis by which jobs are grouped. • Clustering individuals into units and units into departments and departments into larger units. • Encourages informal Communication among people and subunits.
  7. 7. Types of Departmentalization Functions Product & Services Process Geography Customer
  8. 8. Types of Departmentalization Functional Product/service Process • Grouped units by performed functions. • Efficiency gained by putting specialist together. • Departmentalize as Manufacturing, Accounting, Supply. • Grouped by type of product or service • Increase accountability for performance • Works for Processing customers as well as product Customers • Departmentalization uses the particular type of customer of the organization. Geography • Grouped on the basis of territory • Valuable if organization’s customer are scattered over a large geographic area
  9. 9. Chain of Command • Unbroken line of authority , extends from top of the organization to the lowest • Clarifies who report to whom • Responsibility, legal duty to perform a task which is assigned • Authority, right inherent in a managerial position to give order and expects them to be obeyed • Unity of command, A person should have one and only one superior to whom he is directly responsible • Organization more productive by enforcing chain of command
  10. 10. Span of Control • The number of subordinates a manager can efficiently and effectively direct • It determine the number of level and manager an organization has • Types of Span Narrow Span Wider Span
  11. 11. Types of Span Wider Span Narrow Span • Most efficient in terms of cost • Reduce efficiency effectiveness and employee performance • Less time to provide leadership and support • • • • Manager can maintain close control Expensive Make vertical communication more complex Slowdown decision making And isolate upper management • Encourage supervision and discourage employee autonomy
  12. 12. Centralization and Decentralization Centralization • Decision making concentrated at single point • Top manager make all decisions • Decision making rate slow • No other one participate in decision making Decentralization • Decision making pushed down to managers closest to the action • Solve problems quickly and effectively • Allow others to participate in decision making • Democrative
  13. 13. Formalization • The degree to which jobs within an organization are standardized • Describe what, when and how to do work • Describe lots of organizational rules and clearly defined procedures covering work process • Reduce ambiguity • Increase consistency and uniform output
  14. 14. Organization Model Mechanistic Model • High Specialization • Rigid Departmentalization • Clear Chain of Command • Narrow Spans of Control • Centralization • High Formalization Organic Model • Cross-functional Team • Cross-hierarchical Team • Free Flow of Information • Wide Spans of Control • Decentralization • Low Formalization
  15. 15. Common Organizational Design Simple Structure • • • • Low degree of departmentalization Wide span of control Centralized Structure Little formalization The Bureaucracy • • • • • Work specialization structure Very formalized rules and regulations Task grouped in functional departments Narrow span of control Centralized authority Matrix Structure • Create dual lines of authority • Combine functional and product departmentalization
  16. 16. New Design Options Virtual Organization Boundaryless Organization • A small , core organization that outsources major business functions • Highly centralized • Little or no departmentalization • Eliminate the chain of command • Limitless span of control • Replace departmentalization with empowered team
  17. 17. Causes of Different Structure Strategy Environme nt Causes Technolog y Organizatio n Size
  18. 18. Organization Size • Organization size’s significantly affects its structure • Larger organization have more specialization , more formalization rather than smaller organization Technology • The way in which an organization transfer its input into output • Technology also affects organization Structure
  19. 19. Strategy Innovation Costminimization Imitation • Emphasizes the introduction of major new products and services • Tight cost control • Avoidance of unnecessary innovation or marketing expenses • Price cutting • Introduce new product only if their viability already proved • Risk aversion strategy
  20. 20. Environment Capacity Volatility Complexity • The degree to which an environment support growth • Rich and growing environments generate excess resources • Describe instability in the environment • Difficult to manage • The degree of heterogeneity and concentration among environmental elements
  21. 21. Organization Structure: Its determinants and Outcomes Causes •Strategy •Size •Technology •Environment Design Determines Associated with •Mechanistic •Organic Performanc e and Satisfaction Moderated by individual differences and cultural norms