Final ob

Behavior
Structure, Process
and Design
Somanath
An organizational structure consists of activities such as
task allocation, coordination and supervision, which are
directed towards the achievement of organizational aims.
An organization can be structured in many different ways,
depending on their objectives. The structure of an
organization will determine the modes in which it operates
and performs.

Achievers Institute

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Nagar, Bangalore

+917204678798

[Type the fax number]

11/27/2011

Behavior Structure, Process and Design

CONTENTS
TITLES PAGE NO

7.1. Behavior Structure 1

7.2. Organization Culture 1

7.3. Organizational Development 9

7.4. Organization Process/Structure 16

7.5. Dimensions Of Organization Structure 19

7.6. Organizational Design 22

7.7. Traditional Organizational Structure 26

7.8. Contemporary Organizational Designs 33

Department of MBA, Govt RC college Page 2


7.1 - BEHAVIOUR STRUCTURE

Behavior structure of organization deals with :

1) Organization Culture
2) Organization Development

7.2 – ORGANIZATION CULTURE :

7.2.1 - Meaning and Definition of Organizational Culture

Organizational culture is accumulated tradition of the organizational
functioning. It is based on certain values, norms and positive attitudes of an
organization. Organizational environment becomes a culture if it is used for
motivating people to avoid any friction and adopt the valuable tradition of the
organization. The success of any organization depends on the culture, as it is the
invisible power governing the organization.According to O‟Rellly,” Organizational
culture is the set of assumptions, beliefs, values and norms that are shared by an
organization‟s members”.

TABLE: Formal components of Organizational Culture :

1) Mission/vision The milestones to be Could be unrealistic.
reached.
2) Policies Statements designed to Policies, if not drafted
be guidelines to properly can provide
behavioral decision. leeway.
3) Procedures Methods of providing Can facilitate or
specific guidelines. create obstacles in
smooth functioning.



4) Rules Specific Instructions for Rules could be a
performing a task. means or an end in
themselves.
5) State f Organizational Organization at young, Stage of
development. growing, maturing or organizational
mature stage of development has
development direct impact on work
culture.

7.2.2 - Characteristics of Organizational Culture :

1) Individual initiative.
2) Risk Tolerance.
3) Direction.
4) Integration.
5) Management Support.
6) Control.
7) Identity.
8) Reward system.
9) Communication Patterns.

7.2.3 - Functions of Organizational Culture:-

1) Organization is recognized by its culture. Whenever people name an
organization, the culture attached to the organization is immediately
remembered. One organization is immediately remembered. One
organization is distinctively different from other organizations by its culture.



2) Organizational Culture makes the boundary beyond which no employees are
permitted to go. They automatically adopt the limit known as a cultural
limit.
3) A number of organizations are well recognized by the culture. They are
given a sense of pride and identity by the public.
4) Organizational culture provides the facilities for self-satisfaction. Employees
get internal satisfaction with an esteemed culture. People are more satisfied
this way than when their individual interests are fulfilled.
5) The culture of an organization provides its stability. People prefer to
continue with the organization. Employees, customers, financiers and other
related persons prefer to remain with the organization.
6) The social recognition of the organizational culture makes the organization
grow and develop in all dimensions.
7) Employees get an opportunity to set the standards of performance. They try
to achieve the standards. It becomes a self-control mechanism which helps
the organization to grow and flourish.
8) The attitude and the behavior of the employees are directed towards the
achievement of goals through a sound culture.
9) Organizational culture acts as a motivator that guides and controls the
employees.

7.2.4 - ELEMENTS OF CULTURE:-

Artifacts: artifacts are the physical things that are found that have particular
symbolism.
Stories, histories, myths, legends, joke.
Rituals, rites, ceremonies, celebrations.



Heroes: idealized examples by which cultural members learn about the
„perfect behavior‟.
Symbols and symbolic actions: symbols can also be used to indicate status
within a culture. This includes clothing, office décor and so on.
Beliefs, assumptions and mental models.
Attitude.
Rules, norms, ethical codes and values.

7.2.5 - LEVELS OF ORGANIZATION CULTURE:

According to Edgar schein organizational culture has three levels. These are:

1) Observable Artifacts: These are the symbols of culture in the physical and
social work environment and are most visible and accessible. Among he
artifacts of culture are the following:-
i. Organizational heroes: As a reflection of the organization‟s
philosophy, this dimension concerns the behavior of
organizational members, specially the behavior of top
management and their leadership styles.
ii. Ceremonies and rites: This reflects the activities that are
enacted repeatedly on important occasions.
iii. Stories: Lavin son and Rosenthal suggest that stories and myths
about organization‟s heroes are powerful tools to reinforce
cultural values throughout the organization an specially n
0rienting new employees.
iv. Cultural Symbols: Certain code of dress or a company logo can
reflect its values and orientations.



2) Shared Values: Values reflect a person‟s underlying belief as to what
should be and what should not be. Values are what those principles and
qualities that shapes our thinking and behavior.
3) Common Assumptions: These are deeply held beliefs that are not
objectively observable but manifest themselves in the behavior of people so
strongly that any violation of such beliefs would be unthinkable.

7.2.6 - PROCESS OF CREATING ORGANIZATIONAL CULTURE:-

Organizational culture is a long-term proposition that must satisfy the
members needs and values and match the cultural requirements of the society of
which the organization is a part. Therefore, the organization has to develop a
culture which is conducive to both the members in it and social culture.

Establishing Operationalizing Socialization of
Creating vision
values values and vision employees

Figure: 1 Process of organizational culture



7.2.7 - MAINTAINING ORGANIZATIONAL CULTURE:-

After the organizational culture is created and developed, the next step is to
maintain it.

Careful
Start
selection
of entry Deselct
level
candidates
Consistent
role model
Humility inducing
experiences promote
openess towards
accepting organizational In-the trenches training leads to
norms and values. mastery of a core discipline.
Reinforcing

Rewards and control
Adherence to values systems are meticulously
enables the refined to einforce
reconciliation of personal behavior that is deemed
sacrifces vital to success in the
market place.

Figure 2: Model of managing Organizational Culture

1) Selection of Entry-Level Personnel
2) Placement on the Job.
3) Job Mastery.

The emotionally balanced employees easily adjust and encounter the
initial cultural shock and concentrate on mastery of their jobs. Superiors and
trainers help the employees in this process.



1) Measuring and Rewarding Performance: - Employees performance is
measured and rewarded based on performance.
2) Adherence to Core Values:- At this stage, the employees are inspired and
encouraged o adhere to the company‟s core values even by sacrificing their
personal comforts like missing weekends, working long hours and taking up
inconvenient job assignments.
3) Reinforcing the Stories and Folklore: At this stage, companies reinforce
organizational folklore.
4) Recognition and Promotion: Management maintains culture by recognizing
and promoting the employees who serve as role models in implementing the
cultural values.

7.2.8 - MERITS OF ORGANIZATIONAL CULTURE:-

1) Culture keeps the people together and increases the cohesiveness or bondage
among its members.
2) Culture performs boundary- defining role.
3) It conveys a sense of identity among the members.
4) It creates a social system of shared values.

7.2.9 - DEMERITS OF ORGANIZATIONAL CULTURE:-

1) When the organization is operating as a dynamic environment, culture does
not allow the organization to change in accordance with the environmental
demands.
2) New entrants bring diversified cultures into the organization. But the strong
cultures demand new employees to confirm to its values rather than
modifying it through their diversified culture, whatsoever their merits may
be.



3) Many business alliances like mergers and acquisitions, today, are tending
towards divorcé due to the strong cultures of the partners to the alliance.

Thus, change in organizational culture is necessary in order to allow the
organization o change in accordance with the environment and to act as a
change agent to the environment.



7.3 – ORGANIZATION DEVELOPMENT

7.3.1 – Meaning and Definition

Theory and practice of planned, systematic change in theattitudes, beliefs,
and values of the employees through creation and reinforcement of long
term training programs. OD is action oriented. It starts with a careful organization
wide analysis of the current situation and of the futurerequirements, and
employs techniques of behavioral sciences such as behavior modeling, sensitivity
training, andtransactional analysis. Its objective is to enable theorganization in
adopting-better to the fast-changingexternal environment of
new markets, regulations, and technologies.

7.3.2 - Objectives of Organizational Development:
As objectives of organizational development are framed keeping in view
specific situations, they vary from one situation to another. In other words, these
programs are tailored to meet the requirements of a particular situation. But
broadly speaking, all organizational development programs try to achieve the
following objectives:
• Making individuals in the organization aware of the vision of the organization
Organizational development helps in making employees align with the vision of
the organization.
• Encouraging employees to solve problems instead of avoiding them.
• Strengthening inter-personnel trust, cooperation, and communication for the
successful achievement of organizational goals.
• Encourage every individual to participate in the process of planning, thus making
them feel responsible for the implementation of the plan.
• Creating a work atmosphere in which employees are encouraged to work and
participate enthusiastically.



• Replacing formal lines of authority with personal knowledge and skill.
• Creating an environment of trust so that employees willingly accept change.
According to organizational development thinking, organization development
provides managers with a vehicle for introducing change systematically by
applying a broad selection of management techniques. This, in turn, leads to
greater personal, group, and organizational effectiveness.
7.3.3 - Organizational Development Process

The organizational development process consists of three major steps: diagnosis,
intervention and evaluation. These steps are similar with the planned change
process, since organizational development is actually a specialized type of change
effort. An organizational development process is most likely to be initiated when
top management believes that there are deficiencies in the way the overall
organization is functioning.

Diagnosis: The first step involves diagnosis of the present situation. Change agents
collect the required information through interviews, questionnaires, internal
documents, records, and reports. Usually, a diagnostic strategy is developed using
two or more methods of data collection after their respective strengths and
weaknesses have been considered.

Intervention: After the situation is diagnosed, organizational development
interventions or change strategies can be designed and implemented with the help
of a change agent. Some of the organizational development intervention techniques
are:



• Process consultation: This is concerned with interpersonal relations and
functioning of work groups. The organizational development change agent
observes the group and gives feedback regarding dysfunctions in areas of decision
making, handling conflicts, and communication patterns.
• Team building: This technique is used to help work groups become effective in
performing their tasks. The organizational development consultant helps in
assessing group tasks, member roles, and strategies for accomplishing work tasks.
• Third-party intervention: Here, organizational development consultants help
the parties concerned to resolve their differences through techniques like problem
solving and conciliation.
• Survey Feedback: In survey feedback, data gathered through survey
questionnaires and personal interviews are analyzed, tabulated into understandable
form and shared with those who first supplied the information. Survey feedback
lets people know where they stand in relation to others on important organizational
issues thus helping them resolve conflicts in a constructive manner. Effective
feedback should be relevant, understandable, descriptive, verifiable, and inspiring.
• Techno structural activities: This technique is used to improve work technology
and organization structure. It is intended to help employees evaluate themselves
and to make appropriate changes in task design, work methods, and organization
structure.
• Skill development: This technique is used to help employees identify their
shortcomings and overcome their deficiencies. It is used to improve performance
in areas such as delegation, problem solving conflict resolution, and leading.



Evaluation: Since organizational development is directed towards long-term
change, organizational development programs have to be monitored on a regular
basis. An accurate evaluation of organizational development interventions is
dependent on the accurate diagnosis of the current situation and the clear
identification of the desired results.
7.3.4 - Benefits of Organizational Development
Could your business or organization benefit from high efficiency and
productivity? Are you working geared towards improving team effectiveness,
customer service and team quality? Well, organizational development is designed
to help you improve on these areas, through performance improvement techniques.
1. Environmental impact

Organizational development aims to create job satisfaction, which is equals life
satisfaction. We all know that the workplace environment plays a role on how we
execute our set of responsibilities. In the same way that employment is important
for the employees, job satisfaction directly influences life satisfaction as well.

2. Reduces absenteeism

According to recent findings, satisfied employees tend to be present often. Some
cases of absenteeism might be due to medical reasons. However, organizational
development helps to predict involuntary absenteeism like surgery, and is done
away with through physical exams.

3. Improves quality and productivity

The major benefit of organizational development is that it helps improve
productivity, as well as quality. Improving quality means your business has a



competitive edge over other competitors. Additionally, it increases productivity
which helps in making quality products; thereby there is no need for rework.

4. Encourages self-improvement

There are numerous benefits associated to personnel training. For this reason, it is
essential to consider organizational development as a training tool for business and
individual self-development and improvement.

5. Helps in conflict resolution

With organizational development, conflict is resolved constructively in such a way
that promotes innovation, and does not interfere with productivity. Additionally,
employees are compensated for success to improve their productivity.

6. Encourages open communication

Communication is open, vertically and laterally, and all feelings and facts are
shared. This proves to be an effective strategy since it allows employees to learn
from personal experience.

Apart from having numerous benefits, organizational development also has its
share of disadvantages as well. It is expensive and time consuming since every
employee has to undergo extensive training.

7.3.5 – Limitations of Organization Development :

1. Organisation development can be no more powerful than the behavioural
science concepts on which it rests. Behavioral science itself has various limitations,
and these are applicable to OD also.



2. There are some persons, specially complacent ones who are not prepared to
apply diligence of effort for improvement and the methods of work involved in OD
are sometimes not of sufficient strength to challenge the motivation of highly
complacent people.

3. Task of the organisation and the characteristics of its membership also put
limitation on the effectives of OD. Thus OD cannot be applied without giving due
regard for the local circumstances existing within any given organisation. For
example, Research and Development a organisations are less responsive to change
potential of OD.

It may be emphasised here that, as with any new strategy, some criticisms
are justified because of mistakes. However, OD can be treated as a more in the
correct direction.

7.3.6 - Organization Development Interventions:

OD interventions are plans or programs comprised of specific activities
designed to effect change in some facet of an organization. Numerous
interventions have been developed over the years to address different problems or
create various results. However, they all are geared toward the goal of improving
the entire organization through change.

In general, organizations that wish to achieve a high degree of organizational
change will employ a full range of interventions, including those designed to
transform individual and group behavior and attitudes. Entities attempting smaller
changes will stop short of those goals, applying interventions targeted primarily
toward operating policies, management structures, worker skills, and personnel
policies.



OD interventions can be categorized in a number of ways, including function, the
type of group for which they are intended, or the industry to which they apply. In
fact, W.L. French identified 13 major "families" of interventions based on the type
of activities that they included—activity groups included teambuilding, survey
feedback, structural change, and career-planning.

Figure An Action Research Model for Organizational Development



7.4 - ORGANIZATION PROCESS/STRUCTURE

Organization structure refers to hierarchical arrangement of various
positions in the enterprise. It also defines the relationship between various
positions, departments and persons. It helps in allocating authority and
responsibility formally and decides who is to report whom and who is direct to
whom. It defines the position of the persons in the organization.

7.4.1-Features of good Organization Structure:

1. Simplicity
2. Flexibility
3. Clear Line of Authority
4. Application of ultimate Responsibility
5. Proper Delegation of Authority
6. Minimum possible managerial levels
7. Principles of Unity of Direction and command
8. Proper Emphasis on Staff
9. Provision for Top Management

7.4.2-Importance of Organizational Structure :

1. Specialization
2. Well Defined Jobs
3. Clarifies Authority and Power
4. Avoiding Duplication of work
5. Co-ordination
6. Source of Support and Security
7. Adoption



7.4.3- Role of Organization Structure :

1. Facilitating Management Action
2. Encouraging Efficiency
3. Communication
4. Optimum Use of Organization Resources
5. Stimulating Creativity
6. Job Satisfaction

7.4.4-Determinants of Organization Structure:

Environment

Organizational
Technology Strategy
Structure

Size

1) Environment : Organizations are open systems that continuously interact with
the outside environment. The macro-environment of business today has
considerable impact on the internal operations of the organization, especially if
the organization is a large one. These external factors include the customers,
cultural and economic conditions as well as international environment. The
organizational structure would depend upon whether there are dynamic and
rapid changes in it.
2) Technology : It is the combinations of tools, techniques and know-how and has
major influences on organizational structure that would depend upon whether
the technology is simple and routine requiring few repetitive tasks.



3) Size : The size of the organization is measured by the number of people
working in the organization would determine as to which type of structure
would be more effective for it.
4) Strategy of the Organization : It is defined as “the determination of the basic
long-term goals and objectives of an enterprise, and the adoption of courses of
action and the allocation of resources necessary for carrying out these goals.”



7.5 – DIMENSIONS OF ORGANIZATION STRUCTURE

7.5.1 - Work specialization

Work specialization (also called division of labour) is the degree to which
organizational tasks are sub-divided into individual jobs. With too much
specialization, employees are isolated and do only a single, tiny, boring job. Many
organizations enlarge jobs or rotate assigned tasks to provide greater challenges.

7.5.2 – Departmentalization :

Departmentalization is the basis on which individuals are grouped into
departments and departments into total organizations. Approach options include:

1. Functional - by common skills and work tasks
2. Divisional - common product, program or geographical location
3. Matrix - combination of Functional and Divisional
4. Team - to accomplish specific tasks
5. Network - departments are independent providing functions for a central
core breaker

Few Common Types of Departmentalization :

Functional departmentalization
Product departmentalization
Customer departmentalization
Geographic departmentalization
Process departmentalization



7.5.3 - Span of management :

Factors influencing larger span of management.

1. Work performed by subordinates is stable and routine.
2. Subordinates perform similar work tasks.
3. Subordinates are concentrated in a single location.
4. Subordinates are highly trained and need little direction in performing tasks.
5. Rules and procedures defining task activities are available.
6. Support systems and personnel are available for the managers.
7. Little time is required in non-supervisory activities such as coordination with
other departments or planning.
8. Managers' personal preferences and styles favour a large span.

7.5.4 - Authority, responsibility, and accountability :

Authority is a manager's formal and legitimate right to make decisions, issue
orders, and allocate resources to achieve organizationally desired outcomes.
Responsibility means an employee's duty to perform assigned task or activities.
Accountability means that those with authority and responsibility must report
and justify task outcomes to those above them in the chain of command.

7.5.5 - Delegation Of Authority :

Delegation is the process managers use to transfer authority and
responsibility to positions below them. Organizations today tend to encourage
delegation from highest to lowest possible levels. Delegation can improve
flexibility to meet customers‟ needs and adaptation to competitive environments.
Managers often find delegation difficult.



Types of authority (and responsibility) :

Line authority
Functional authority
Staff authority

7.5.6 - Centralization, decentralization, and formalization :

Centralization - The location of decision making authority near top
organizational levels.
Decentralization - The location of decision making authority near lower
organizational levels.
Formalization - The written documentation used to direct and control
employees.



7.6 - ORGANIZATIONAL DESIGN

7.6.1 – Meaning of Organizational Design :

It is the design of an Organizational structure where organizational structure
is the design of the pattern of positions and functions in the organization.
Organizational design includes structure as well as the design of the organizational
process of work, in particular decision making process.

7.6.2 - Factors to be considered while Designing Organizational Structure :

While designing a structure, the following points should be given adequate
consideration.

1.Departmentation: Departmentation is the process of arranging work to form
positions functions, and other organisational elements.There are several ways of
departmentation. However, any base should provide

facility in co-ordination
advantages of specialisation,
minimum cost,
emphasise on important activities,
consideration of internal and external factors, and external factors, and
development of individuals. Departmentation is not a fixed pattern, it
should be checked and analysed from time to time to make necessary
adjustment according to changes in internal an external variables.

2. Balancing. Each function should be given its proper emphasis with respect to its
basic purpose in the organisation. Each element of the organisation should be seen



in the context of total structure because no decision can be taken on a particular
element in isolation. Compromise in various elements gives a balanced and
workable organization structure.

3.Focusing of Operating Responsibility. The work assignment creates
responsibility. Organisation structure should clearly define the responsibility of all
the individuals so that they exactly know what is expected of them. Clearly defined
responsibility helps in delegating appropriate authority to various level. Moreover,
when responsibility is clearly defined, the persons can be trained accordingly to
occupy the position.

4. Establishing Span. Span of management, supervision, or control refers to the
number of people one manager can supervise. There is a limit on this number;
however, arbitrary designation of limits on number is misleading. In practice, the
span may vary widely because a number of factors determine this. The span should
be decided on the basis of its needs at various levels of organisation

5. Facilitating Units. Departmentation and responsibility centres provide as to
who will perform the work. The persons heading the responsibility centres need the
help of facilitating units which are created in the organisation. These units may be
organised in the form of departments, sectors, or committees. In organising these
units, factors like co-ordination of operating units, consistent action throughout the
organisation, provision for adequate importance and control, and common use of
specialised facilities should be considered.

6. Continuity. The structure is determined for future period also. As such, it
should be designed in such a way that it helps in achieving the objectives of near



future also. For this purpose, the structure should be kept flexible enough so that it
can be adjusted to changing conditions.
7.6.3 – Importance of Organizational Design :

1. Dealing with contingencies. A contingency is an event that might occur and
must be planned for such as a changing environment.

2. Gaining Competitive Advantage. Increasingly, Organizations are discovering
that organization design is a source of sustained competitive advantage.

3. Managing Diversity. Differences in the race, gender, and national origins of the
organizational members have important implications for the values of an
organization‟s effectiveness.

4. Efficiency and Innovation. Organizations exists to produce goods and services
that people value. The better organization function, the more value.

7.6.4 – Models of Organizational Design :

1. Mechanistic Model:

i. Extensive Departmentalization
ii. High Formalization
iii. A limited information network
iv. Centralization

2. Organic model:

i. Cross Hierarchical and cross functional teams
ii. Low formalization
iii. Comprehensive information network
iv. High participation in decision-making



7.6.5 – Types of Organizational Structure :

1) Traditional Organizational structure/Design

2) Contemporary Organizational Designs



7.7 - TRADITIONAL ORGANIZATIONAL STRUCTURE

1. Line or military organization
2. Line and staff organization
3. Functional Organization
4. Divisional Organization

1.Line or Military Organization :

It is the one in which all managers have direct authority over their respective
subordinates through the chain of command. Authority flows directly from top to
bottom through various managerial positions. Each superior is and who authority
to issue order.

Features of Line Organization :

 It is a simple type of organization.
 Only one form of authority viz line authority exists in this form of
organization.
 The authority relationships are clearly established.
 All the managers in the line organizations have full authority to decide
things to act with respect to their respective function.
 In this Line Organization, departments are created for basis activities each of
which is self continued as the related services are also part of the activities
of the departmental heard.

Advantages of Line Organization:

1. Simplicity
2. Identification of authority and responsibility
3. Co-Ordination



4. Effective Communication
5. Quick Decisions
6. Unity of Command
7. Effective Control and supervision
8. Executive Development
9. Flexibility

Disadvantages of Line Organization:

1. Excess work
2. Lack of specialization
3. Lack of Co-ordination
4. Improper Communication
5. Favoritism
6. Lack of initiative
7. Instability

2. Line and staff Organization :

The line and staff organization refers to an organization in which two type of
authority relationships coexist they are direct or line authority and advisory
authority.

The line authority flows downward And staff authority plows upward :

1. Executive assistant to the managing director
2. Legal Advisor to the Organization
3. Quality control manager
4. Personnel Officer



Types of Staff :

1.Personal Staff :

Personal Staff means a person who assists another person in the performance
of a work effectively under such circumstances the work of the line officer‟s could
not be delecated to others.

2.Specialized Staff:

The Specialized Staff officer‟s render service to the line officer‟s at all levels
of the organization. The specialized staff officer offer advice with some limited
provisions. These provisions are imposed by the management.

3.General Staff Assistant:

General Staff assistant are a group of person‟s who are rendering services as
advisors to top management in specialized matters. The primary feature of the
general staff is that they give advice regarding overall plans and policies of the
organization. But they are not specialized in any area.

Functions of Staff:

1. The Staff officers assists the line officers in the planning of business activity.

2. The board of directors frame the policies of the business on the basis of
recommendations given by the staff officers.

3. The managers can get the advice from the staff officers regarding the
selection, training, placement and remuneration fixation of the personnel.

4. Staff officers of a department help the manager in the preparation of budget of
the department.



Advantages of Line and Staff Organization:

1.Specialization

2.Better Discipline

3.Balanced and Prompt Decisions

4.Growth and Expansion

5.Development of Employees

6.Lesser Burden on Line Officers

Disadvantages of Line and Staff Organization:

1.Conflict between Line and Staff Organization.

2.Lack of Responsibility.

3.More dependence on staff.

4.Lack of co-ordination.

5.Ineffective staff.

6.Expensive.



3. Functional Organization:

It is the type of organization where line,staff and functional authority exist
together. It is limited form of the line authority given to functional experts over
certain specialized activities under the normal supervision of mangers belonging to
other departments. Managers who are given functional authority have the right to
issue directives on matters over which they do not have direct line authority
otherwise.

Features of Functional Organization:

1. It is more complex organization than line organization and line and staff
organization.
2. Three types of authority relationships exists.
3. More importance is given to the staff specialists.
4. The principle of unity of command does not apply to this form of
organization,managers and others get instruction from more than one
superior.

Advantages of Functional Organization:

1.Specializaion.

2.Increase in Efficiency

3.Scope for Growth

4.Flexibility

5.Relief to top Executives

6.Economy of Operations



7.Better Supervision

8.Democratic control

Disadvantages of Functioinal Organization:

1. Conflict in authority

2. Lack of co-ordination

3. Difficulty in fixing responsibility

4. Delay in taking Dicisions

5. Poor Descipline

6. Expensive

7. Group Rivelris

8. Application of Expert Knowledge

9. Mass production

10. Economy

11. Complex Relationships

12. Cenralization



4. Divisional Structure :

The second basic structure form employed by organizations is the divisional
structure. While growth through expansion of some line of business forces a small
organization to recognize on functional basis,growth through gographic and
product diversification necessitates the adoption of divisional structure.

Advantages of Divisional Structure :

1. Divisional structure emphasizes on the end result,that is, on product,or
customer through which revenue is generated in the organization.
2. Since a division focuses its attension on a particular product or service,its
performance measurement is easier as the performance can be measured in
the light of contributions made by the division.
3. There is a high level managerial motivation because managers work in the
environment of autonomy.
4. Through divisional structure,more managers with general outlook can be
developed who can easily take up the job at the corporate level. Thus there is
no problem in managerial succession.
5. Organizational size can be increased without any as new divisions can be
opened without disturbing the existing system.

Disadvantages of Divisional Structure :

1. It is quite costly because all the facilities have to be arranged for each other.
2. Lack of emphasis of functional specialization.
3. Lack of Managerial personnel.
4. Control system is major problem of divisionalization.



7.8 - CONTEMPORARY ORGANIZATIONAL DESIGN

7.8.1-Project Mnagement :

Features Of Project Organization:

project organization has been found to be of great great use under the
following situations:

1. The company gets one time assignments or a big contract in addition to its
regular activiteis. The assignment should be definable in tern of a single,
specific goal.
2. The assignment or project is unique. Infrequent and unfamiliar to the present
organization.
3. The project is complex and calls for high degree of interdependence among
the tasks.
4. The project assignment to be completed within the time limit prescribed by
the client. There may be a penalty clause if the project is not completed in
time.
5. Successful completion of the project is essential as the image of the
company is at stake.

Advantage of project organization:

The advantage of project organization are as follows:

1. Project organization can be tailored to meet the requirements of a particular
project. It enables the organizations to adopt to environmental demands
particularly when environmental factors are fast changing.



2. Project organization allows maximum use of specialized knowledge available
with the organization, Specialists gets higher satisfaction while working on
complex projects. Knowledge and skills can be transferred from one
particular project to another.

Limitations of project organization:

A project manager has to face unusual problems resulting from the project
organization. Following problems are usually experienced in project organization:

1. Project organization creates a feeling of insecurity and uncertainty among
people in organization. It is an adhoc arrangement with limited life.
Therefore, a question comes in mind of people what will happen after the
project is over.
2. People are not able to identify themselves with any particular department
of organization because they do not have permanent tenure with any
project. Thus there is lack of loyalty and feeling of belongingness in
people towards organization.
3. The project manager has to deal with specialist from a number of diverse
field. The specialists often have different types of orientations and
interests.
4. The job of the project manager becomes difficult because of lack of
clearly defined responsibility, lack of clear communication pattern and
lack of standards of performance of various professionals.
5. Decision making is made very difficult because there are unusual
pressures from diverse fields.



7.8.2-The Matrix Design :

Very popular organization design is the “Matrix design”. This design
combines two forms departmentalization.

 Functional
 Product

The matrix design attempts to gain in the strength of both these forms of
departmentalization while avoiding the weakness.

Advantages of matrix design :

1. It facilitates coordination when the organization has a multiplicity of
complex and independent activities.
2. The direct and frequent contact between different experts in the matrix can
provide for better communication and more flexibility.
3. The matrix reduces the drawbacks of bureaucratic design. The dual lines of
authority reduces the tendency of departmental heads to put their
departmental goals first before the organizational goals.
4. The matrix facilitates the efficient allocation of specialists. When individuals
who are specialists in particular lodged in the functional department or
product group, their talents are monopolized and underultilized.

Disadvantages of Matrix design :

1. The matrix design creates the confusion in the organization. When there is a
dual chain of command, ambiguity increases and ambiguity leads to conflict.
2. The matrix has the propensity to foster power struggles. In bureaucracy, the
rules of the game are defined which reduces the potential for power grabs.



3. This design put a lot of pressure and stress on the individual employees.
Dual unity of command introduces role conflicts and unclear expectations
introduce role ambiguity.

7.8.3-Horizontal Organizations :

Horizontal designs replace the traditional vertical, hierarchical organization,
The advanced information technology and globalization environment, suggests the
use of horizontal structure to facilitate cooperartion,teamwork, and a customer
rather than functional orientation.

The following guiding principles that define horizontal organization design :

1. Organization revolves around the process, not the risk
2. Hierarchy is flattened
3. Teams are used to manage everything
4. Customers Drive Performance
5. Team performance is rewarded
6. Supplier and customer contact is maximized
7. All employees need to be fully informed and trained


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