7 organizational structure deepak agrawal

Presented by:Presented by:Deepak AgrawalDeepak Agrawal(08MTHYD023)(08MTHYD023)

Organizational StructureOrganizational Structure

Is it related to your behavior???Is it related to your behavior???

• How you form a group..How you form a group..• How you sit in a group..How you sit in a group..• How you react at any situation..How you react at any situation..• How you respect position..How you respect position..• How much freedom you have..How much freedom you have..• How much authority and responsibilities you How much authority and responsibilities you

have..have..• How much power you have..How much power you have..

Organizational Structure

If YesIf Yes

Then obviously Organization structure also lead to individual(employee) behavior….

FLOW of PresentationFLOW of Presentation

Elements that define organization’s structureElements that define organization’s structure

Different Organizational DesignsDifferent Organizational Designs

• Three traditional organizational designsThree traditional organizational designs• Simple, Bureaucracy, Matrix structureSimple, Bureaucracy, Matrix structure

• Some new design optionsSome new design options• Team Structure, Virtual Organization, Boundaryless organizationTeam Structure, Virtual Organization, Boundaryless organization

Contrast Mechanistic and organic structureContrast Mechanistic and organic structure

Influencing factorsInfluencing factors

• Strategy, Organization size, Technology, EnvironmentStrategy, Organization size, Technology, Environment

Organizational Design and Employee BehaviorOrganizational Design and Employee Behavior


Defining Organizational StructureDefining Organizational Structure

• Organizational StructureOrganizational Structure defines how job tasks are formally divided, grouped, defines how job tasks are formally divided, grouped,

and coordinated.and coordinated.

• Organizational DesignOrganizational Design A process involving decisions about six key elements:A process involving decisions about six key elements:

Work specializationWork specialization

DepartmentalizationDepartmentalization

Chain of commandChain of command

Span of controlSpan of control

Centralization and decentralizationCentralization and decentralization

FormalizationFormalization


Organizational Structure (1)Organizational Structure (1)Work SpecializationWork Specialization

The degree to which tasks in the organization are The degree to which tasks in the organization are sub-divided into separatesub-divided into separate

jobs jobs with each stepwith each step

completed by acompleted by a

different person.different person.

OverspecializationOverspecialization can result in can result in human diseconomies human diseconomies from boredom, fatigue, stress, poor quality, from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover.increased absenteeism, and higher turnover.


Pro

du

ctiv

ity

Work SpecializationLow High

High

Impact f

rom

economies o

f

specializatio

n

Impact from human

diseconomies

Organizational Structure (2)Organizational Structure (2)

• Functional Functional Grouping jobs by Grouping jobs by

functions performedfunctions performed

• ProductProduct Grouping jobs by product Grouping jobs by product

lineline

• GeographicalGeographical Grouping jobs on the Grouping jobs on the

basis of territory or basis of territory or geographygeography

• Process Process Grouping jobs on the Grouping jobs on the

basis of product or basis of product or customer flowcustomer flow

• CustomerCustomer Grouping jobs by type of Grouping jobs by type of

customer and needscustomer and needs


Departmentalization by TypeDepartmentalization by Type

• Advantages

• Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations

• Coordination within functional area

• In-depth specialization

• Disadvantages

• Poor communication across functional areas

• Limited view of organizational goals


2.1- Functional Departmentalization2.1- Functional Departmentalization

+ Allows specialization in particular products and services

+ Managers can become experts in their industry

+ Closer to customers

– Duplication of functions

– Limited view of organizational goals


2.2- Product Departmentalization2.2- Product Departmentalization

LG

Home Appliances

Television Refrigerator

Washing Machine

Computers

Laptop Desktop

Keyboard Speaker Accessories

Telecom devices

Mobile Fixed line phone

• Advantages

• More effective and efficient handling of specific regional issues that arise

• Serve needs of unique geographic markets better

• Disadvantages

• Duplication of functions

• Can feel isolated from other organizational areas


2.3- Geographical Departmentalization2.3- Geographical Departmentalization

+ More efficient flow of work activities

– Can only be used with certain types of products


2.4- Process Departmentalization2.4- Process Departmentalization

RTO Office

Accounts

New Registrati

onPenalty

Registration

Vehicle Check

Driving test

Processing Approval Dispatch

+ Customers’ needs and problems can be met by specialists

- Duplication of functions

- Limited view of organizational goals


2.5- Customer Departmentalization2.5- Customer Departmentalization

Organization Structure (3)Organization Structure (3)

• Chain of CommandChain of Command The continuous line of authority that extends from The continuous line of authority that extends from

upper levels of an organization to the lowest levels of upper levels of an organization to the lowest levels of the organization and clarifies who reports to whom.the organization and clarifies who reports to whom.

• AuthorityAuthority The rights inherent in a managerial position to tell The rights inherent in a managerial position to tell

people what to do and to expect them to do it.people what to do and to expect them to do it.

• Unity of CommandUnity of Command The concept that a person should have one boss and The concept that a person should have one boss and

should report only to that person.should report only to that person.



• Span of ControlSpan of Control The number of employees who can be effectively and The number of employees who can be effectively and

efficiently supervised by a manager.efficiently supervised by a manager.


4.1- Span of Control4.1- Span of Control

• Width of span is affected by:Width of span is affected by: Skills and abilities of the managerSkills and abilities of the manager

Employee characteristicsEmployee characteristics

Characteristics of the work being doneCharacteristics of the work being done

Similarity of tasksSimilarity of tasks

Complexity of tasksComplexity of tasks

Physical proximity of subordinatesPhysical proximity of subordinates

Standardization of tasks Standardization of tasks



• CentralizationCentralization The degree to which decision-making is The degree to which decision-making is concentratedconcentrated

at a single point in the organizations.at a single point in the organizations. Reduced Reduced information overloadinformation overload on upper managers. on upper managers. Increased Increased motivationmotivation and accountability throughout and accountability throughout

organization.organization. Fewer managers; lower bureaucratic Fewer managers; lower bureaucratic costscosts..

• DecentralizationDecentralization Organizations in which decision-making is pushed Organizations in which decision-making is pushed

down to the managers who are down to the managers who are closest to the actionclosest to the action.. Easier Easier coordinationcoordination of organizational activities. of organizational activities. Exercise of strong leadership in Exercise of strong leadership in crisiscrisis.. FasterFaster decision making and response. decision making and response.



• FormalizationFormalization The degree to which jobs within the organization are The degree to which jobs within the organization are

standardizedstandardized and the extent to which employee and the extent to which employee behavior is guided by behavior is guided by rules and proceduresrules and procedures.. Highly formalized jobs offer little discretion over what is to be Highly formalized jobs offer little discretion over what is to be

done.done. Low formalization means fewer constraints on how Low formalization means fewer constraints on how

employees do their work.employees do their work.


DIFFERENT ORGANIZATIONAL DIFFERENT ORGANIZATIONAL DESIGNSDESIGNS

Part-2Part-2


Traditional StructuresTraditional Structures Simple structureSimple structure

Low departmentalization, Wide spans of control, Centralized Low departmentalization, Wide spans of control, Centralized authority, Little formalizationauthority, Little formalization– Flat Organization (2 or 3 vertical levels)Flat Organization (2 or 3 vertical levels)

StrengthsStrengths SimpleSimple Fast and flexibleFast and flexible Inexpensive to maintainInexpensive to maintain Clear accountabilityClear accountability

WeaknessesWeaknesses Information Overload at topInformation Overload at top Slower decision making if largeSlower decision making if large Dependency on one figureheadDependency on one figurehead


Owner

Sales Person1

Sales Person2

Sales Person3 Cashier Stock

KeeperDelivery

Boy

Traditional StructuresTraditional Structures The BureaucracyThe Bureaucracy

High departmentalization by function, High departmentalization by function, Narrow span of controlNarrow span of control, , Centralized authority, High formalizationCentralized authority, High formalization

StrengthsStrengths Efficiency to perform standardized tasksEfficiency to perform standardized tasks Economies of scaleEconomies of scale Minimum duplication of personnel & equipmentMinimum duplication of personnel & equipment Cost advantage by less talent huntingCost advantage by less talent hunting

WeaknessesWeaknesses Subunit Conflicts (“Subunit Conflicts (“Bureaupathologies”Bureaupathologies”)) Fails to take environment into accountFails to take environment into account Is less effective during change or turbulence, requiring Is less effective during change or turbulence, requiring

flexibility and actionflexibility and action Ignores interpersonal relationshipsIgnores interpersonal relationships


Traditional StructuresTraditional Structures The Matrix structureThe Matrix structure

Departmentalized by both functions and products, No unity of Departmentalized by both functions and products, No unity of commandcommand

StrengthsStrengths Strength of both function and product departmentalizationStrength of both function and product departmentalization Better and direct communicationBetter and direct communication More FlexibilityMore Flexibility Reduce Reduce BureaupathologiesBureaupathologies Maximizes use of employees’ skillsMaximizes use of employees’ skills

WeaknessesWeaknesses Dual chain of commandDual chain of command Power strugglePower struggle Role conflictRole conflict Less predictabilityLess predictability


Two-boss employee

New Design OptionsNew Design Options Team structuresTeam structures

The entire organization is made up of work groups or self-The entire organization is made up of work groups or self-managed teams.managed teams.

Require Generalists as well as specialists employeeRequire Generalists as well as specialists employee

No departmentalization, DecentralizedNo departmentalization, Decentralized

StrengthsStrengths FlexibilityFlexibility Empowered employeesEmpowered employees Reduced barriers among functional areas (Cross-functional)Reduced barriers among functional areas (Cross-functional)

WeaknessesWeaknesses No clear chain of commandNo clear chain of command Pressure on teams to performPressure on teams to perform


New Design OptionsNew Design Options Virtual OrganizationVirtual Organization

A small core organization that outsources its major business A small core organization that outsources its major business functions in order to concentrate what it does best.functions in order to concentrate what it does best.

Highly centralized, no departmentalizationHighly centralized, no departmentalization

Only coordination and controlling relationshipsOnly coordination and controlling relationships

StrengthsStrengths Choosing best alternatives alwaysChoosing best alternatives always Best for finite period existence (e.g. Olympics)Best for finite period existence (e.g. Olympics) Maximum flexibilityMaximum flexibility

WeaknessesWeaknesses Reduces management’s control over key partsReduces management’s control over key parts


New Design OptionsNew Design Options Boundaryless Organization (Concept)Boundaryless Organization (Concept)

It behaves more like an organism encouraging better It behaves more like an organism encouraging better integration among employees and closer partnerships with integration among employees and closer partnerships with Stakeholders.Stakeholders.

– No chain of command, limitless spans of controlNo chain of command, limitless spans of control

StrengthsStrengths Highly flexible and responsiveHighly flexible and responsive Draws on talent wherever it’s foundDraws on talent wherever it’s found Cross hierarchical team, Cross functional teamCross hierarchical team, Cross functional team No external boundariesNo external boundaries

WeaknessesWeaknesses Lack of controlLack of control Communication difficultiesCommunication difficulties


ORGANIZATION DESIGN ORGANIZATION DESIGN DECISIONSDECISIONS

Part-3Part-3


A rigid and tightly controlled A rigid and tightly controlled structurestructure High specializationHigh specialization

Rigid departmentalizationRigid departmentalization

Clear chain of commandClear chain of command

Narrow spans of controlNarrow spans of control

High formalizationHigh formalization

CentralizationCentralization

Limited information network Limited information network (downward)(downward)

Organizational Design DecisionsOrganizational Design Decisions

Highly flexible and Highly flexible and adaptable structureadaptable structure Cross functional teamCross functional team

Cross hierarchical teamCross hierarchical team

Free flow of informationFree flow of information

Wide spans of controlWide spans of control

Less formalizationLess formalization

DecentralizationDecentralization

Free flow of informationFree flow of information


Contingency FactorsContingency Factors


InnovationInnovationCost-minimizationCost-minimization

Imitation StrategyImitation Strategy

LargerLarger SmallerSmaller

RoutineRoutine Non-routineNon-routine

StrategyStrategy

SizeSize

TechnologyTechnology

EnvironmentEnvironmentStable

Simple

Stable

Simple

Dynamic

Complex

Dynamic

Complex

Structural decisions are influenced by:

Organization Structure and Employee Organization Structure and Employee BehaviorBehavior


Determinants

Associated with

Moderated byIndividual

Differences and cultural norms

Moderated byIndividual

Differences and cultural norms

THANK YOUTHANK YOUFOR YOUR PATIENCE…FOR YOUR PATIENCE…

7 organizational structure deepak agrawal

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