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Changing org structure


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Describes olden and current forms of organizational structure

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Changing org structure

  2. 2. What is organizational structure? • The levels of management and division of responsibilities within an organization • Break down of the managers and the different departments within an organization • It shows who manages who and how the organization is split up to perform different tasks
  3. 3. What is organizational structure? • As a business expands it means that the business will more than likely take on more staff. • With the addition of new staff more managers may be needed or managers will be responsible for new staff. • This will change the structure
  4. 4. BUILDING BLOCKS OF STRUCTURE • Which elements of a company’s structure make difference in how we behave and how work is coordinated? • Four aspects – Centralization – Formalization – Hierarchical levels – Departmentalization
  5. 5. CENTRALIZATION • Degree to which decision-making authority is concentrated at higher levels in an organization • Many important decisions are made at higher levels of the hierarchy, whereas in decentralized companies, decisions are made and problems are solved at lower levels by employees who are closer to the problem in question. E.g. CATERPILLAR • Decentralized companies give more authority to lower-level employees, resulting in a sense of empowerment
  6. 6. CENTRALIZATION • Some employees are more comfortable in an organization where their manager confidently gives instructions and makes decisions. • Centralization may also lead to more efficient operations, particularly if the company is operating in a stable environment • Organizations can suffer from extreme decentralization, E.g. FBI
  7. 7. FORMALIZATION • Extent to which an organization’s policies, procedures, job descriptions, and rules are written and explicitly articulated • Control employee behavior using written rules, so that employees have little autonomy to decide on a case-by-case basis • It makes employee behavior more predictable • Whenever a problem at work arises, employees know to turn to a handbook or a procedure guideline. Therefore, respond to problems in a similar way across the organization; this leads to consistency of behavior
  8. 8. FORMALIZATION • A high degree of formalization may actually lead to reduced innovativeness • Reduced motivation and job satisfaction as well as a slower pace of decision making • The service industry is particularly susceptible to problems associated with high levels of formalization
  9. 9. HIERARCHICAL LEVELS • Number of levels it has in its hierarchy – Tall structure • Many managers to report to • Mainly in well est. org - Greater job security – Flat structure • Less managers to report to • Greater need satisfaction • Limited advancement opportunities
  10. 10. DEPARTMENTALIZATION • Functional – Based on similarity in functions (Mktg, fin, HR, etc) – Each person serves a specialized role and handles large volumes of transactions • Divisional – Departments represent the unique products, services, customers, or geographic locations the company is serving – Each unique product or service the company is producing will have its own department – employees act like generalists as opposed to specialists
  11. 11. Functional Divisional
  12. 12. Rates & Ratios (As on 28/3/2014) Ratios Rates Cash Reserve Ratio 4.00 Statutory Liquidity Ratio 23.00 Cash-Deposit Ratio 4.78 Reverse Repo Rate 6.50 Bank Rate 8.50 Savings Deposit Rate 4.00 Marginal Standing Facility (MSF) Rate 8.50
  13. 13. Exchange rates Country Exchange rate Australian Dollar 55.433 Brazilian real 26.5 British Pound 99.87 Chinese Yuan 9.67 Euro 82.65 Singapore Dollar 47.60 Swiss Franc 67.81 US dollar 59.96 South African rand 5.67 Saudi Riyal 15.99
  14. 14. CONTEMPORY FORMS OF ORG STRUCTURE • Matrix organizations – Created in response to uncertainty and dynamism of the environment and the need to give particular attention to specific products or projects – Have a design that combines a traditional functional structure with a product structure – Balance the benefits of product-based and traditional functional structures
  15. 15. • Matrix organizations – Employees reporting to department managers are also pooled together to form project or product teams – Product managers have control and say over product- related matters, while department managers have authority over matters related to company policy – Increase communication and cooperation among departments because project managers will need to coordinate their actions with those of department managers
  16. 16. • Boundaryless organizations – Eliminates traditional barriers between departments as well as barriers between the organization and the external environment – Modular Organization • nonessential functions are outsourced • retain only the value-generating and strategic functions in-house – Strategic alliances • similar to a joint venture, two or more companies find an area of collaboration and combine their efforts to create a partnership that is beneficial for both parties
  17. 17. • Learning organizations – Actively seeks to acquire knowledge and change behavior as a result of the newly acquired knowledge. – Experimenting, learning new things, and reflecting on new knowledge are the norms – Are also good at learning from experience—their own or a competitor’s – At IBM, learning is encouraged by taking highly successful business managers and putting them in charge of emerging business opportunities (EBOs)
  19. 19. WHY DO ORGANIZATIONS CHANGE? • Movement of an organization from one state of affairs to another. • A change in the environment often requires change within the organization operating within that environment • Change involves letting go of the old ways in which work is done and adjusting to new ways. • Therefore, fundamentally, it is a process that involves effective people management
  20. 20. – Organizational change is often a response to changes to the environment – Organizations may realize that as the workforce gets older, the types of benefits workers prefer may change – Flexible work hours and job sharing to facilitate retiring employees – Dealing with age-related stereotypes which act as barriers in the retention of these employees Workplace Demographics
  21. 21. – Rapid developments in technology – Moore’s Law – complexity double every 18 months with no increase in costs – Sometimes technology produces such profound developments that companies struggle to adapt, E.g. CD’s Technology
  22. 22. • Differences in national economies and standards of living from one country to another • Organizations in developed countries are finding that it is often cheaper to produce goods and deliver services in less developed countries • Out source & Offshore Globalization
  23. 23. • E.g. World Trade Center attack • Simultaneous widespread of internet booking encouraged them to compete primarily based on cost • Cut back on amenities • Whether the organization changes or not in response to environmental challenges and threats depends on the decision makers’ reactions to what is happening in the environment Changes in Market Conditions
  25. 25. • Essential for a company to remain competitive. • Failure to change may influence the ability of a company to survive. • Resistance to change is one of the top reasons change efforts fail. RESISTANCE TO CHANGE
  26. 26. • Active resistance - sabotage the change effort and be outspoken objectors to the new procedures • Passive resistance - involves being disturbed by changes without necessarily voicing these opinions • Compliance - involves going along with proposed changes with little enthusiasm • Enthusiastic support - defenders of the new way and actually encourage others around them to give support to the change effort as well Reactions To Change
  27. 27. • Disrupted habits • Personality • Feeling of uncertainty • Fear of failure • Personal impact of Change • Percieved loss of power Reasons to Resist
  28. 28. • LEWIN’S 3 STAGE PROCESS – Unfreeze • Ensures employees are ready – Change • Execute – Refreeze • Ensures it becomes permanent PLANNING & EXECUTING CHANGE
  29. 29. THANK YOU