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Organisation structure and design

Dr. Sunil Kumar
Dr. Sunil Kumar
Dr. Sunil KumarAssistant Professor, Mizoram University Aizawl at Department of Tourism and Hospitality Management, Mizoram University

Organizational design is actually a formal process of integrating people, information and technology

Organisation structure and design

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ORGANISATION STRUCTURE AND
DESIGN
Chef Sunil Kumar 1
Chef Sunil Kumar
CONTENTS
• Introduction to Organisational Structure and
Design
• What is Organisation ?
• Structure and Chart
1. Formal.
2. Informal.
• Organisations
1. External factors
2. Internal factors. 2
Chef Sunil Kumar
INTRODUCTION TO ORGANISATIONAL STRUCTURE
AND DESIGN
 Organisational Structure is the way in which the interrelated groups of an
organization are constructed.
 The main concerns are effective communication and coordination
 Organisational Structure and design helps influence behavior and relationships of
jobs and functions
 It also provide a purposeful and goal oriented behaviour.
 It is beneficial in working efficiencial and inspiring innovation.
3
Chef Sunil Kumar
WHAT IS ORGANISATION ?
 Organisational are the grand strategies created to
bring order to a concerted effort for the achievement
of certain objectives and goals.
 An organisation is an entity comprising multiple
people, such as an institution or an association, that
has a collective goals and is linked to an external
environment.
 Organisation are composed of individuals and
groups of individual and they consist of different
functions.
4
Chef Sunil Kumar
DETERMINANTS OF ORGANISATIONAL STRUCTURE
ORGANISATIONAL STRUCTURE
1. Technology
2. Size
3. Environment
4.
Strategy
5
Chef Sunil Kumar
DETERMINANTS OF ORGANISATIONAL STRUCTURE
1. TECHNOLOGY :- It is defined as in terms of knowledge and the use of tools.
Technology refers to the tools and machines that may be used to helps solve problems.
It includes technical methods, skills, processes, techniques, tools and raw materials.
2. ENVIRONMENT :- Environment is a important factor of Organisational structure. It
include both internal factors and external factors. Internal factors include management,
employees, owner, workplace culture and Human Resource. External factors are things
that are outside the company that include competitor, customers, technology, the
economy, and legal issues etc. It is important for the user to look after external factors
so as to achieve the goals.
3. SIZE :- There are several criteria to determine size of an organization such as number
of persons employed, amount of capital invested, volume of turnovers etc. As an
organization grow in size its structure naturally becomes complex. Therefore size
though an element of organization structure is a factor that determines type of
organization structure.
4. STRATEGY :- Organisational goals influence the way an organization is designed. The
high value placed on productivity and quality as well as shareholders value had a major
influence on the redesign of Westinghouse as a more diversified and decentralized
organization.
6
Chef Sunil Kumar

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Organisation structure and design

  • 1. ORGANISATION STRUCTURE AND DESIGN Chef Sunil Kumar 1 Chef Sunil Kumar
  • 2. CONTENTS • Introduction to Organisational Structure and Design • What is Organisation ? • Structure and Chart 1. Formal. 2. Informal. • Organisations 1. External factors 2. Internal factors. 2 Chef Sunil Kumar
  • 3. INTRODUCTION TO ORGANISATIONAL STRUCTURE AND DESIGN  Organisational Structure is the way in which the interrelated groups of an organization are constructed.  The main concerns are effective communication and coordination  Organisational Structure and design helps influence behavior and relationships of jobs and functions  It also provide a purposeful and goal oriented behaviour.  It is beneficial in working efficiencial and inspiring innovation. 3 Chef Sunil Kumar
  • 4. WHAT IS ORGANISATION ?  Organisational are the grand strategies created to bring order to a concerted effort for the achievement of certain objectives and goals.  An organisation is an entity comprising multiple people, such as an institution or an association, that has a collective goals and is linked to an external environment.  Organisation are composed of individuals and groups of individual and they consist of different functions. 4 Chef Sunil Kumar
  • 5. DETERMINANTS OF ORGANISATIONAL STRUCTURE ORGANISATIONAL STRUCTURE 1. Technology 2. Size 3. Environment 4. Strategy 5 Chef Sunil Kumar
  • 6. DETERMINANTS OF ORGANISATIONAL STRUCTURE 1. TECHNOLOGY :- It is defined as in terms of knowledge and the use of tools. Technology refers to the tools and machines that may be used to helps solve problems. It includes technical methods, skills, processes, techniques, tools and raw materials. 2. ENVIRONMENT :- Environment is a important factor of Organisational structure. It include both internal factors and external factors. Internal factors include management, employees, owner, workplace culture and Human Resource. External factors are things that are outside the company that include competitor, customers, technology, the economy, and legal issues etc. It is important for the user to look after external factors so as to achieve the goals. 3. SIZE :- There are several criteria to determine size of an organization such as number of persons employed, amount of capital invested, volume of turnovers etc. As an organization grow in size its structure naturally becomes complex. Therefore size though an element of organization structure is a factor that determines type of organization structure. 4. STRATEGY :- Organisational goals influence the way an organization is designed. The high value placed on productivity and quality as well as shareholders value had a major influence on the redesign of Westinghouse as a more diversified and decentralized organization. 6 Chef Sunil Kumar
  • 7. ORGANISATIONAL STRUCTURE AND CHART… An organizational chart is a DIAGRAM that shows the STRUCTURE of an organization and the relationship and relative ranks of its parts and position/jobs. The term is also used for similar diagrams, for example ones showing the different elements of a field of knowledge or a group of languages. It is a diagram showing graphically the relation of one official to another, or others, of a company. A company organizational chart typically illustrates relation between people within an organization. 7 Chef Sunil Kumar
  • 8. TYPES OF ORGANISATIONAL CHART AND STRUCTURE 1. FORMAL 2. INFORMAL 8 Chef Sunil Kumar
  • 9. FORMAL ORGANISATIONAL CHART AND STRUCTURE The FORMAL ORGANISATIONAL CHART & STRUCTURE is an officially codified hierarchical arrangement of relationships between different jobs within the organizational units and relationship between department within the organization. TYPES OF FORMAL ORGANISATIONAL CHART:- 1) FUNCTIONAL 2) LINEAR 3) MATRIX 4) STAFF & LINE 9 Chef Sunil Kumar
  • 10. 1) FUNCTIONAL ORGANISATIONAL CHART  Functional Organisational chart is one of type of formal organizational chart.  The basis of this structure is the situation known as the “MARTYR STAKE” in which the worker receives from different superiors different commands. 10 Chef Sunil Kumar
  • 11. 2) LINEAR ORGANISATIONAL CHART  This is one of the basic organizational arrangement.  The position and relations of superiority and inferiority are arranged and oriented vertically.  Each superior has clearly assigned subordinates and each subordinates has clearly assigned superior. 11 Chef Sunil Kumar
  • 12. 3) MATRIX ORGANISATIONAL CHART  It is also known as Project Structure. The basis of the organizational structure is a classical vertical linear structure, which is combined with a horizontal structure showing Ad- hoc generated teams dedicated t special projects.  For different projects different projects teams are created with different managers and different roles for the individuals workers nominated into individual teams. 12 Chef Sunil Kumar
  • 13. 4) STAFF AND LINE ORGANISATIONAL CHART  A line function is the one that directly advance an organization in its core work.  This always includes production and sales, and sometimes also marketing.  It is based on the arrangement of LINEAR ORGANISATIONAL extended by the Staff departments that provide support for management for different hierarchical levels and area of the operation of the organization. 13 Chef Sunil Kumar
  • 14. ADVANTAGE OF FORMAL ORGANISATION 1) SYSTEMATIC WORKING:- Formal organization structure results in systematic and smooth functioning of an organizing. 2) ACHIEVEMENT OF ORGANISATIONAL OBJECTIVES:- Formal organizational structure is established to achieve organizational objectives. 3) NO OVERLAPPING OF WORK:- In Formal Organisation structure work is systematically divided among various department and employees. So there is no chance of duplication or overlapping of work. 4) CO-ORDINATION:- Formal organizational structure results in coordinating the activities of various department. 5) CREATION OF CHAIN OF COMMAND:- Formal organisation structure clearly defines superior subordinates relationship, i.e., who reports to whom 6) MORE EMPHASIS ON WORK:- Formal organizational structure lays more emphasis on work than interpersonal relations 14 Chef Sunil Kumar
  • 15. DISADVANTAGE OF FORMAL ORGANISATION 1. DELAY IN ACTION:- While following scalar chain and chain of command actions get delayed in formal structure. 2. IGNORES SOCIAL NEEDS OF EMPLOYEES:- Formal organizational structure doesn't give importance to psychological and social need of employees which may lead to demotivation of employees. 3. EMPHASIS ON WORK ONLY:- Formal organisational structure gives importance to work only: it ignores human relation, creativity, talents, etc. 15 Chef Sunil Kumar
  • 16. INFORMAL ORGANISATIONAL CHART AND STRUCTURE  It include personal relations, relations and interactions of people in the organization, that are created naturally, informally, and unofficially. They take place in an informal way outside the framework of Formal organizational structure.  The informal organizational structure crosses it horizontally, vertically, and diagonally.  It is a type of Social Network and can be analyzed with adequate methods :- 1) SOCIOMETRY 2) SOCIAL NETWORK ANALYSIS. 16 Chef Sunil Kumar
  • 17. 1) SOCIOMETRY  Sociometry is one of the most popular method of social network analysis.  Its author is Jacob Levy Moreno, who originally developed it for the needs of Psychotherapy.  The purpose is to map all relationships and divide them into positive and negative choices  The result of the Sociometry is important for assessing the climate in the group (organization, unit, team, etc.) 17 Chef Sunil Kumar
  • 18. 2) SOCIAL NETWORK ANALYSIS  Social Network Analysis understands Social Network as a system of interconnected nodes through edges (their relationship).  This is made by mathematical method and network analysis methods.  Social Network Analysis is used in knowledge management  The result is a Map showing graphically all element of social system and their relationships. 18 Chef Sunil Kumar
  • 19. ADVANTAGE OF INFORMAL ORGANISATION 1. FAST COMMUNICATION:- Informal structure does not follow scalar chain so there can be faster spread of communication. 2. FUFILLS SOCIAL NEEDS:- Informal communication gives due importance to psychological and social need of employees which motivate the employees. 3. CORRECT FEEDBACK:- Through informal structure the top level managers can know the real feedback of employees on various policies and plans. The employees can also improve there performance by listening their performance. 19 Chef Sunil Kumar
  • 20. DISADVANTAGES OF INFORMAL ORGANISATION 1. SPREAD RUMOURS:- According to a survey 70% of information spread through informal organizational structure are rumors which may mislead the employees. 2. NO SYSTEMATIC WORKING:- Informal structure does not form a structure for smooth working of an organization 3. MAY BRING NEGATIVE RESULTS:- If informal organization opposes the policies and changes of management, then it becomes very difficult to implement them in organization 4. MORE EMPHASIS TO INDIVIDUAL INTEREST:- Informal structure gives more importance to satisfaction of individual interest as compare to organisational interest 20 Chef Sunil Kumar
  • 21. EXTERNAL FACTORS AFFECTING ORGANISATIONAL DESIGN.. Although many things can affect the choice of an appropriate structure for an organization, the following four factors are common:- 1. Size 2. Life Cycle 3. Strategy 4. Environment 21 Chef Sunil Kumar
  • 22. EXTERNAL FACTORS… 1. SIZE:- The larger the organization the more complicated the structure and when the organization is small such as retail store or a restaurant its structure can be simple. In large organization the structure is formal so it could be easy for employees to manage 2. LIFE CYCLE:- All the organization structure tend to move through life cycle. Although an organization have to proceed different stages to achieve a goal. As an organization age, they tend to get larger; thus, the structural changes a firm experiences as it gets larger and the changes it experience as the firm progresses through life cycle. As a result, the older and larger the organization becomes, the greater the likelihood that it will move from an organic structure to a mechanistic structure. 22 Chef Sunil Kumar
  • 23. EXTERNAL FACTORS… 4. STRATEGY:- It is really important factor as the organization position itself in the market with the newest and best product(differentiate strategies) or it may decide that it will produce a product already on the market more efficiently and more cost effectively(Cost-leadership strategy). Each strategies requires structures that helps the organisations reach its objectives. 5. ENVIRONMENT:- The environment is the world in which the organization operates, and includes conditions that influence the organization such as economic, social culture, politics, technological and natural environment. Environment are often described as STABLE and DYNAMICS, In stable environment customers desires are well understood while In dynamic the costumers desires are changing which also affect the organizational structure as there is competitive pressure in an organisations. 23 Chef Sunil Kumar
  • 24. INTERNAL FACTORS AFFECTING ORGANISATIONAL STRUCTURE Every organization has its own culture. The internal factors determine how the organization moves forward, both as a self-contained organizational entity and in response to its external environment. There are four factors:- 1. Learning 2. Leadership 3. Communication 4. Mission 24 Chef Sunil Kumar
  • 25. INTERNAL FACTORS 1. LEARNING:- Learning is one of the most fundamental human activities and accounts directly or indirectly for the success of any organization. Today’s most successful organizations, like GOOGLE, APPLE led by Elon Musk, are essentially learning organizations. 2. LEADERSHIP:- Leadership is important for an organization. Right leadership will fulfills the goals of the organizations. Great leaders motivate their employees and teach them how to work. 3. COMMUNICATION:- Successful organizations thrive on robust communication practices, where teams and teams leaders communicate easily and often to improve results. Organizations with communication deficiencies often have rigid leadership structures that destroy trust. 4. MISSION:- It is very important for an organizations to set the MISSION for success. A successful organizational has a clear sense of its ultimate purpose and knows how it intends to fulfill that purpose. 25 Chef Sunil Kumar
  • 26. DEGREE OF DECENTRALISATION  Degree of Decentralization indicates the extent to which an organization wants to decentralize depends upon the degree of decentralization.  Managers cannot be ordinarily for or against DECENTRALISATION of authority.  They may prefer to delegate authority or they may prefer to delegate authority, or they may like to make all decisions. 26 Chef Sunil Kumar
  • 27. FACTORS TO DETERMINE DEGREE OF DECENTRALISATION  Factors to determine the Degree of decentralization are:- 1. Costliness of Decisions 2. Uniformity of Policy 3. Economic Size 4. Availability of Managers 5. History of the Enterprise 6. The Philosophy of the Management 7. Decentralization of Performance 8. Environmental Influence. 27 Chef Sunil Kumar