Key Components of Organization Structure – Refer Pg. 44
centralized decision making – problems and decisions are funneled to top level of hierarchy for resolutiondecentralized decision making – decision-making authority is pushed down to lower organizational levels
Refer Pg 47-52
Talk about differences between functional and divisional structures (Pg 59)
Organization Structure Organization Structure is typically the hierarchical arrangement of lines of authority, communications, rights and duties of an organization It determines how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management Organization Structure defines 3 key components It designates formal reporting relationships It identifies the grouping together of individuals It includes the design of systems to ensure effective communication, coordination and integration across departments
Organization Structure Organization Structure is reflected in an Organization Chart Organization Chart is the visual representation of a whole set of underlying activities and processes in an organization After the Industrial Revolution, Organization Structure came into existence, largely to increase efficiency In the modern day, a hierarchical structure is not always viable and different companies adopt different structures
Information Sharing Organization Design requires both vertical and horizontal flow of information Vertical flow of information emphasizes on efficiency and control, thus calling for centralized decision making On the other hand, Horizontal flow of information emphasizes on learning and adaption, resulting in decentralized decision making Each of these flows makes use of structural devices
Information Sharing Vertical Information Sharing Hierarchical Referral Rules and Plans Vertical Information Systems Horizontal Information Sharing Information Systems Direct Contact Task Forces Full-Time Integrator Teams
Grouping Options Functional Grouping: Places together employees who perform similar functions or work processes Divisional Grouping: People are organized according to what the organization produces Multifocused Grouping: Organization embraces two or more structural grouping alternatives simultaneously Horizontal Grouping: Employees are organized around core work processes Virtual Network Grouping: Organization is a loosely connected cluster of separate components
Functional Structure In this activities are grouped together by common function from the bottom to the top of the organization Most effective when in-depth expertise is critical to meet organizational goals and efficiency is important It is centralized, as decisions are forced all the way to the top In the modern world, companies find it hard to be successful with this structure Organizations compensate by installing horizontal linkages
Functional Structure STRENGTHS WEAKNESSESAllows Economics of scale within Slow response time tofunctional departments environmental changesEnables in-depth knowledge and May cause decisions to pile onskill development top; Hierarchy overloadEnables organization to Leads to poor horizontalaccomplish functional goals coordination among departmentsIs best with only one or a few Results in less innovationproducts Involves restricted view of organizational goals
Divisional Structure It is also sometimes known as Product Structure or Strategic Business Units Divisions can be organized based on products, services, divisions, etc. Its distinctive feature is that grouping is based on organizational outputs Unless effective horizontal mechanisms are in place, a divisional structure can hurt overall performance
Divisional Structure STRENGTHS WEAKNESSESSuited to fast changes in unstable Eliminates Economies of scale inenvironment functional departmentsLeads to customer satisfaction Leads to poor coordination acrossbecause product responsibility product linesand contact points are clearInvolves high coordination across Eliminates in-depth competencefunctions and technical specializationAllow units to adapt to differences Makes integration andin products, regions, customers standardization across product lines difficultBest in large organizations withseveral productsDecentralizes decision making
Matrix Structure This can be used when both technical expertise and product innovation and change are important to organizational goals Unique characteristic is that both product divisions and functional structures (horizontal and vertical) are implemented simultaneously Conditions for Matrix Structure Condition 1: Pressure exists to share scarce resources across product lines Condition 2: Environmental pressure exists for two or more critical outputs Condition 3: Environmental domain of the organization is both complex and uncertain
Matrix Structure Companies have found balancing of horizontal and vertical structures Two matrix structures have evolved: Functional Matrix & Product Matrix Works best when there is high environmental change and goals reflect dual requirement Works best when there are few product lines as too many product lines cause difficulty in coordination of both directions
Matrix Structure STRENGTHS WEAKNESSESAchieve coordination necessary to Causes participants to experiencemeet dual demands from dual authority which can becustomers frustrating and confusingFlexible sharing of human Means participants need goodresources across products interpersonal skills and extensive trainingSuited to complex decisions and Is time consuming; involvesfrequent changes in unstable frequent meetings and conflictenvironment resolution sessionsProvides opportunity for both Will not work unless participantsfunctional and product skill understand it and adopt collegialdevelopment rather than vertical type relationshipBest in medium-sized organizations Requires great effort to maintainwith multiple product power balance
Horizontal Structure It organizes employees around core processes Organizations shift towards this structure by Reengineering, which means redesigning a vertical organization along its horizontal workflows and processes Process is an organized group of related tasks and activities that work together to transform inputs and outputs that create value for customers Many companies are now moving towards the Horizontal Structure
Horizontal Structure STRENGTHS WEAKNESSESPromotes flexibility and rapid Determining core processes isresponse to changes in customer difficult and time consumingneedsDirects the attention of everyone Requires changes in culture, jobtowards the production and design, management philosophy,delivery of value to the customers and information and reward systemsEach employee has a broader Traditional managers may balkview of organizational goals when they have to give up power and authorityPromotes a focus on teamwork Requires significant training ofand collaboration employees to work effectively in a horizontal team environment
Strategy & Structure Strategy is a company’s plan to achieve a set of goals Strategy & Structure of an organization are intricately bound and should be closely linked to achieve chosen results Once the organizational strategy is in place, the company can choose the optimum structure to go about implementing it
About Tata Consultancy Services is the most leading IT services, business solutions and outsourcing organization in India It organizes its global operations into integrated, customer-centric units to enhance customer focus, drive operational agility and address new growth opportunities in the market TCS has over 263,000 of the worlds best trained IT consultants in more than 50 countries and year-end revenues of more than $10 billion With such a large employee base, it needs a structure that allows us to build a nimble organization to capture new growth opportunities
The Changing Structure The IT firm tweaked its management structure to bring in greater vertical focus within the firm The company has a vertical structure under which the company has 23 separate business units, and each unit’s head reports directly to the CEO The heads will own the profit and loss aggregated from those of the individual ISUs within their stack; country heads dont own P&Ls It is not a major change, similar to Infosys executive council model focusing more on vertical structure
Organizational Structure TCS has tried to find the middle ground between the Vertical vs. Horizontal structure, with clients clustered vertically within the business so that they can benefit from shared expertise in each ISU, supported by horizontal groups focusing on strategic and tactical company-wide initiatives It makes the company stove-piped, resulting in reduced economies of scale, flexibility and agility but its process/technology excellence, resource management, and strategic initiatives as horizontal units is clearly trying to counter this risk Major verticals have their own ISUs but clients could just as well be clustered, not by industry vertical, but by the problem they are trying to solve, or the technology utilized, or geographic region.
Growth and empowerment The model provides customers with a single view of TCS encompassing project delivery and relationship management and enable a sharper focus on the customer It will provide more opportunities for leadership growth at all levels to run business units with growth and profit responsibilities The modular structure will simplify the customer interface to adapt to specific customer and market requirements while ensuring a uniform global service delivery The structure will also support greater focus for strategic initiatives that will help drive non-linear revenue growth and leverage TCS sales, delivery and customer relationships as required
Starbucks - Matrix Structure Form in which there are multiple lines of authority and some individuals report to at least two managers. Made up of cross functional work teams that have the ability to report to heads of the organization other than the primary supervisor. Successful communication upward, downward, and laterally with its employees. All channel communication allowing employees to communicate actively with each other, making all members free to contribute
Love Coffee Love People ! District managers oversee regional groupings of stores. These district managers report directly to the Starbucks Corporation. At each store, a store manager acts as the chief. Under this store manager are a collection of shift supervisors who act as managers on duty when the store manager is out. Below the shift supervisors are the rest of the employees, referred to as baristas.
Love Coffee Love People !Organizational DistributionThree-region organizational structure: China and Asia Pacific: All Asia Pacific markets and China Americas: United States, Canada, Mexico and Latin America EMEA: Europe, U.K., Middle East, Russia and Africa A president for each region will oversee the company- operated retail business, working closely with both the licensed and joint-venture business They will also work closely with Starbucks Global Consumer Products and Foodservice team. All three new regional presidents – Burrows, Culver and Gass - along with Hansberry and Young-Scrivner will report to Schultz, CEO.
Love Coffee Love People ! Employees as “Partners” While Starbucks workers also have more specific titles, including barista and shift supervisor, the Starbucks corporation has long referred to their workers as "partners." This term is intended to make clear how integral Starbucks employees, no matter how low on the chain, are to the companys success.
Love Coffee Love People ! Effects of Matrix Structure Productivity - implementing the concepts of lean manufacturing to raise the efficiency and productivity of its stores. Empowerment - delivering great customer experience, supporting in doing the right thing and conducting business with integrity. Responsibility - playing a critical role in ensuring that Starbucks is a great work environment and in protecting culture, reputation and brand. Mutual Help – Making resources available in times when needed, including the Standards of Business Conduct and the Business Conduct Helpline. Voicing Opinions – Sharing concerns and believing in opinions, knowing that Starbucks wants to hear them and value them all.
Brief Interaction with StarbucksEmployees at CP(on a scale of 1-10) Freedom of Employees? 8 Standardization? 9 Coordination? 8 Recognition? 7