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Oganisational design & structure

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Oganisational design & structure

  1. 1. What Is Organizing? Organizing: Arranging the activities of the enterprise in such a way that they systematically contribute to the enterprise’s goals.
  2. 2. Organization designOrganization design –– management decisions andmanagement decisions and actions that result in a specific organization structure.actions that result in a specific organization structure. Organization structure –Organization structure – the pattern of jobs and groupsthe pattern of jobs and groups of jobs in an organization. It is an important cause ofof jobs in an organization. It is an important cause of individual and group behavior.individual and group behavior. Organization Structure & Design
  3. 3. 4 Organization Chart Organization Chart: A chart that shows the structure of the organization including the title of each manager’s position and, by means of connecting lines, who is accountable to whom and who has authority for each area.
  4. 4. Organization Chart I n f o r m a t io n S e r v ic e s G r o u p C a ta lo g e r C a ta lo g e r C u s t o m e r L i a i s o n T a x o n o m y D e s i g n e r K n o w le d g e A r c h i te c t u r e L e a d D e v e lo p e r D e v e lo p e r S y s t e m s A d m in S e a r c h / S y s t e m s L e a d A s s i s t a n t D e s i g n e r D e s i g n L e a d K n o w le d g e A r c h i t e c t u r e M a n a g e r
  5. 5. Basic Concepts: Organization Organizational Hierarchy (flat & Tall Organizations) Authority (Centralization & Decentralization ) Responsibility Span of Management
  6. 6. Principles of Organization Align department objectives to corporate goals Cost-effective operations Optimum number of subordinates Specialization Define authority & Flow of authority Ensure one employee, one superior One head and one plan Define responsibility Commensurate authority and responsibility & Attain balance Ensure flexibility & Manage via exceptional cases Provide for continuity
  7. 7. Determine what is to be done/ Division of Work: Assign Tasks: Departmentalization: Link Departments: Hierarchy Development: Decide how much Authority to Designate/ Authority, Responsibility and Delegation: Decide the Levels at which Decisions are to be made / Centralization vs. Decentralization: Decide how to Achieve Coordination: Process of Organizing
  8. 8. LINE ORGANIZATION Line Organization structure is also known as scalar, military or vertical organization and perhaps is the oldest form. This concept holds that in any organization or hierarchy derived from a scalar process, there must be a single head who commands it.  All persons of the same organization are independent of each other.  This structure specifies responsibility and authority for all positions limiting the area of action by a particular position holder.
  9. 9. ExamplE for lINE orGaNIZaTIoN Chief ExecutiveChief Executive FOREMAN A FOREMAN B FOREMAN C Workers Workers Workers
  10. 10. lINE aND STaff orGaNIZaTIoN The problem can usually be solved by classifying activities within an organization in two ways: 1. That which is substantive (direct) in its contribution – Line activities 2. That which is objective (indirect) in its contribution – Staff activities
  11. 11. ExamplE for lINE aND STaff orGaNIZaTIoN GENRAL MANAGER Public Relations OfficerSecretary Manager (Finance) Manager (personnel) Manager - Production Manager - Marketing Production Engineer Production Engineer Workers Workers
  12. 12. fUNCTIoNal orGaNIZaTIoN It is created by grouping the activities on the basis of functions required for the achievement of organizational objectives. CHARACTERISTICS: 1. Specialization by functions 2. Emphasis on sub-goals 3. Pyramidal growth of Organization 4. Line and staff division 5. Limited span of management 6. Functional authority relationships among departments
  13. 13. ExamplE for fUNCTIoNal orGaNIZaTIoN Head Quarters Production Marketing Finance Personnel Plant 1 Plant 2 Plant 3 P M F P P PM MF FP P
  14. 14. CommITTEE orGaNIZaTIoN It can be defined as a body of persons appointed to meet on an organized basis for the discussion and dealing of matters brought before it. FEATURES: 1. Group of persons 2. Can deliberate only on matters that are brought before it 3. Members of the committee draw authority through delegation.
  15. 15. ExamplE for CommITTEE orGaNIZaTIoN
  16. 16. MATRIX ORGANIZATION Matrix Organization is the realization of two dimensional structure which emanates directly from two dimensions of authority. 1. Pure project structure 2. Functional structure
  17. 17. Functional Geographic Product Customer
  18. 18. Departmental Bases: Functional Departmentalization Jobs are combined according to the functions of the organization The principal advantage is efficiency By having departments of specialists, management creates efficient units A major disadvantage is that organizational goals may be sacrificed in favor of departmental goals
  19. 19. EngineeringEngineeringEngineeringEngineering ReliabilityReliabilityReliabilityReliability FinanceFinanceFinanceFinance ManufacturingManufacturingManufacturingManufacturing DistributionDistributionDistributionDistribution HumanHuman ResourcesResources HumanHuman ResourcesResources PublicPublic RelationsRelations PublicPublic RelationsRelations PurchasingPurchasingPurchasingPurchasing OBM CompanyOBM CompanyOBM CompanyOBM Company
  20. 20. Departmental Bases: Geographic Departmentalization Establish groups according to geographic area The logic is that all activities in a given region should be assigned to a manager Advantageous in large organizations because physical separation of activities makes centralized coordination difficult Provides a training ground for managerial personnel
  21. 21. Northeast Midwest Southeast Pacific OBM Company Southwest Geographic Departmentalization Structure
  22. 22. Departmental Bases: Product Departmentalization All jobs associated with producing and selling a product or product line will be placed under the direction of one manager Product becomes the preferred basis as a firm grows by increasing the number of products it markets Concentrating authority, responsibility, and accountability in a specific product department allows top management to coordinate actions
  23. 23. OBM CompanyOBM CompanyOBM CompanyOBM Company SmallSmall HouseholdHousehold AppliancesAppliances SmallSmall HouseholdHousehold AppliancesAppliances LargeLarge HouseholdHousehold AppliancesAppliances LargeLarge HouseholdHousehold AppliancesAppliances CommercialCommercial AppliancesAppliances CommercialCommercial AppliancesAppliances BuildingBuilding Materials andMaterials and ProductsProducts BuildingBuilding Materials andMaterials and ProductsProducts Lawn andLawn and GardenGarden ProductsProducts Lawn andLawn and GardenGarden ProductsProducts AutomotiveAutomotive ProductsProducts AutomotiveAutomotive ProductsProducts
  24. 24. Departmental Bases: Customer Departmentalization The importance of customer satisfaction has stimulated firms to search for creative ways to serve people better Organizations with customer-based departments are better able to satisfy customer-identified needs than organizations that base departments on non- customer factors
  25. 25. Retail Stores Mail Order On-Line Sales Government Contracts OBM Company Institutional Sales Customer Departmentalization Structure
  26. 26. MODERN ORGANISATION STRUCTURES Virtual Organizations Virtual organization – a collection of geographically distributed, functionally and/or culturally diverse aggregations of individuals that is linked by electronic forms of communication Assembled and disassembled according to needs
  27. 27. CoreCore FirmFirm (Canada)(Canada) ProductProduct DevelopmentDevelopment FirmFirm (France)(France) MarketingMarketing FirmFirm (U.K.)(U.K.) CustomerCustomer ServiceService FirmFirm (U.S.A.)(U.S.A.) ProductionProduction FirmFirm (China)(China) AccountingAccounting FirmFirm (Canada)(Canada)
  28. 28. Organizations in which: the hierarchy and chain of command are minimized rigidly structured departments are eliminated Implemented to reduce barriers between people and constituencies
  29. 29. VIRTUAL ORGANIZATION Virtual Organization is a temporary network of independent companies – suppliers, customers, even erstwhile rivals – linked by information technology to share skills, costs and access to one another’s markets. It will have neither central office nor organization chart. It will have no hierarchy, no vertical integration.
  30. 30. CELLULAR ORGANIZATION It is a form of organization consisting of a collection of self-managing firms or cells held together by mutual interest. A cellular organization is built on the principles of self- organization, member ownership, and entrepreneurship. Each cell within the organization shares common features and purposes with its sister cells but is also able to function independently.
  31. 31. TEAM STRUCTURE A Team is a group of people in the organization constituted for completing certain assignments. TYPES: 1. Lead Team 2. Cross-functional Team 3. Problem-solving Team 4. Self-managing Team
  32. 32. Features of Team-Based Structures Structure is built around Self-directed work teams rather than individuals Teams organized around work processes Very flat span of control Very little formalization Most supervisory activities are delegated to the team Usually found within divisionalized structure Very responsive and flexible; empowerment is high; reduced need for managers; time consuming; ambiquity
  33. 33. BOUNDARYLESS ORGANIZATION It is a model that views organizations as having permeable boundaries. An organization has external boundaries that separate it from its suppliers and customers, and internal boundaries that provide demarcation to departments. This rigidity is removed in boundaryless organizations, where the goal is to develop greater flexibility and responsiveness to change and to facilitate the free exchange of information and ideas.
  34. 34. Empowered front-Empowered front- line workersline workers SupportSupport PersonnelPersonnel TopTop Mgmt.Mgmt. • Alternative to traditional chain of command • It includes a few levels of management • Sales people and sales support staff sit on the top as the key decision makers for all the issues related to sales and dealing with the customers

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