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MS-10. UNIT 1 APPROACHES TO UNDERSTANDING ORGANIZATION. INTRODUCTION. - PowerPoint PPT PresentationTRANSCRIPT
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Presentation Title
INTRODUCTION
Organization is a principle of life. We seek the help of organizations to meetour day to day requirements such as to feeding, clothing, educating ,entertaining, protecting etc. However, organizations are not contemporary creations. Organizations are as old as human race
Presentation Title
DEFINITION
The term organization is derived from the Greek word organon i.e., tool or instrument. It is often been understood as the embodiment of persistent efforts to coordinate, influence and control human behavior in order to reach some desired result. According to Chester I. Bernard, an organization is “a system of consciously co-coordinated activities or forces of two or more persons”.
Presentation Title
The Organisation is Differentiated Internally
The Organisation is Legitimate
The Organisation is Flexible
Presentation Title
ORGANIZATION AS SYSTEM
A system is a set of integrated and mutually dependent parts arranged in a manner that produces a unified whole. It has been defined as “ an arrangement of interrelated parts. The words arrangement and interrelated describes the interdependent elements forming an entity that is the system.
Components of Organization System: Organizations are systems of some interacting components. Levitt (1965) sets out a basic framework for understanding organizations. This framework emphasizes four major internal components such as: task, people, technology, and structure.
Presentation Title
The Organization As An Open System
There are two basic types of systems: open and closed. A closed system is one that is self-contained and isolated from its environment. An open system is one which constantly interacts with the environment. In the strictest sense, every worldly system is partly closed and partly open. Closed systems exist only in theory, for all real systems interact with their environment.
Presentation Title
Goals and values, technical, psychosocial, technical, structural, and managerial, which are dependent on each other.
Organization, like organisms, are “open” to their environment and strive to attain an appropriate relation with that environment in order to survive.
As an open system, it influences and is influenced by the environment through the process of interdependency, which results in a dynamic (changing) equilibrium.
Like other open systems , the organization system may be expressed in terms of input-output mechanisms. All systems transform inputs into outputs.
The system is viewed as a transformation process in dynamic interaction with its environment.
Presentation Title
Organisms:Living systems, environmental conditions, adaptation, life cycles, recycling, needs,homeostasis, evolution, survival of the fittest, health, illness.
Brains:Learning, parallel information processing, distributed control, mindsets, intelligence,feedback, requisite variety, knowledge, networks.
Presentation Title
Political Systems:Interests and rights, power, hidden agendas and back room deals, authority,alliances, party-line, censorship, gatekeepers, leaders, conflict management.
Psychic Prisons:Conscious & unconscious processes, repression & regression, ego, denial,projection, coping & defence mechanisms, pain & pleasure principle, dysfunction,workaholics.
Presentation Title
Instruments of Domination:Alienation, repression, imposing values, compliance, charisma, maintenance of power, force, exploitation, divide and rule, discrimination, corporate interest.
Presentation Title
7Ss MODEL
The Seven S Framework was first appeared in “The Art Of Japanese Management” by Richard Pascale and Anthony Athos in 1981. It was born at a meeting of the four authors namely Richard Pascale, Anthony Athos, Tom Peters, and Robert Waterman in 1978 and come into sight in “In Search of Excellence” by Peters and Waterman. The global management consultancy McKinsey has taken up it as a basic tool , therefore at times it is known as the McKinsey 7S Model.
Presentation Title
ORGANIZATION DESIGN
The term ‘organizational design’ refers to how various parts of the organization and the distinct elements are brought together to make it. It considers both, how these elements match together and ways in which they may be analyzed and improved.
Presentation Title
ORGANIZATION DESIGN
to support the organization’s strategy. The structure should be designed in such a way as to assure the realization of the organization’s goals and objectives;
to arrange resources in the most efficient and effective way;
to provide for the effective division of tasks and accountabilities among individuals and groups;
to ensure effective co-ordination of the organization’s activities and clarify the decision-making processes;
Presentation Title
© Copyright PCTI Group 2009
to enhance and elucidate the lines of communication up, down and across the organization; to permit for the effective monitoring and review of the organization’s activities;
to endow with mechanisms for coping with change in markets, products and the internal and external environments;
to aid the handling of crises and problems;
to help to motivate, manage and give job satisfaction to individual members of the organization; and
to provide for management succession
Presentation Title
ORGANIZATIONAL DESIGN
The various parts of the structure should be divided into specialist areas. These specialist areas need to be interlinked.
The number of levels in the structure, sometimes referred to as the scalar chain, should be as few as possible.
The span of control, i.e, the number of subordinates directly managed, will vary according to the nature of the jobs and the organization, but it should not be so narrow that it results in a structure with too many levels, or too broad to allow effective management.
Presentation Title
© Copyright PCTI Group 2009
There should be what has been described as unity of command. For this the reporting positions and authority need to be clearly defined.
Every post in the structure should have a clear role and add value to the way the organization functions.
The extent to which the organization should be centralized or decentralized will need to be determined by reference to a number of factors. These include, the nature and type of industry, geographical dispersion, history, environment, resources available etc.
The structure must be designed to take account of changes in the environment, which can include the economy, legislation, markets, technological developments, geography, cultural environment, and social environment.
Presentation Title
© Copyright PCTI Group 2009
THEORIES OF ORGANIZATION DESIGN
Basically, there are two theories of organization design : universalistic & contingency theories. The universalistic theory assumes that there is “one best way” to organize. It means the maximum organizational performance comes from the maximum level of a structural variable, for instance, specialization (Taylor, 1947). Classical management is an earlier organizational theory that argue that maximum organizational performance results from maximum formalization and specialization and it is therefore a universalistic type of theory.Similarly, neo-human relations is also an earlier universalistic type of organizational theory, which claims that organizational performance is maximized by maximizing participation
Presentation Title
Size: Large Small
Technology: Task interdependence
Differentiation occurs through division of labor and technical specialization. Integration occurs when specialists cooperate to achieve a common goal. In the Lawrence and Lorsch model, integration can be achieved through various combinations of the following six mechanisms: (1) a formal hierarchy; (2) standardized policies, rules, and procedures; (3) departmentalization; (4) committees and cross-functional teams; (5) human relations training, and (6) individuals and groups acting as liaisons between specialists. When Lawrence and Lorsch studied successful and unsuccessful companies in three industries, they concluded that: As environment complexity increased, successful organizations exhibited higher degree of both differentiation and integration.
Presentation Title
Dynamism
Dynamism relates to the stability or instability of the environment. Several authors have identified dynamism as one of the major environmental contingencies of organizations (Child 1975; Duncan 1972; Thompson 1967). Dess and Beard (1984) emphasize that dynamism is not simply the rate of change, which itself could be constant, thereby rendering the environment predictable, but rather the degree of unpredictability. As they state, “Dynamism should be restricted to change that is hard to predict and that heightens uncertainty for key organizational members”. This corroborates the significance of uncertainty as a strategic element of dynamism.
Presentation Title
ORGANIZATIONAL EFFECTIVENESS
Organizations are constructed to be the most effective and efficient social units. The actual effectiveness of a specific organization is determined by the degree to which it realizes its goals. The efficiency of an organization is measured by the amount of resources used to produce a unit of output. Output is usually closely related to, but not identical with, the organizational goals. For instance, Ford produces automobiles (its output), but its goal seems to be profit-making.The unit of output is a measurable quantity of whatever the organization may be producing.
Presentation Title
BLOCK-II
Presentation Title
UNIT-3 TYPOLOGY OF ORGANIZATION STRUCTURES
An organization structure specifies the various job tasks and shows how the same are formally divided, grouped, and coordinated. It provides an appropriate framework for authority relationship. It indicates the hierarchy of authority and the reporting relationships.
Presentation Title
© Copyright PCTI Group 2009
Today’s managers realize that the traditional organization structures based on bureaucratic principles no longer provide solutions to the challenges posed by the new paradigm environment. The needs of flexibility, adaptability to change, creativity, innovation, knowledge and the ability to overcome environmental uncertainties are among the biggest challenges facing many of the organizations. The result has been that the vertical (tall) structures are being replaced by horizontal (flat) structures, the organizations with mechanistic structures are being transformed into ones with organic structure .
Presentation Title
Line Organization
Line organization is the simplest form of organization structure. The line structure is based on the scalar principle, which states that authority and responsibility should flow in a direct line vertically from the highest level of the organization to the lowest level. The primary emphasis in the line organization is upon the superior-subordinate relationship.
Presentation Title
© Copyright PCTI Group 2009
Most business organizations, except the very small, have this type of structure. As the organizations have grown complex, the problems of line executives have become sufficiently complicated. The line executives being generalists, need the advice of personnel with specialized knowledge and functions to tackle these problems. For this purpose, the staff positions are created in the organization. In line and staff organization, the line authority remains the same as it does in the line organization i.e. the authority flows from top to bottom; and the line executives perform the major functions; the staff functionaries support and advise the line executives.
Presentation Title
© Copyright PCTI Group 2009
This is the most widely used form of organization structure because of its simple logic and commonsense appeal. Here the tasks are grouped together on the basis of common functions. So, all production activities or all financial activities are grouped into a single function which undertakes all the tasks required of that function.
Presentation Title
© Copyright PCTI Group 2009
This form of organization structure is adopted by large companies producing a wide range of products. Here, the activities are grouped on the basis of the individual products manufactured by the company. Thus, one finds autonomous “little companies within the company” adopting this type of organization structure. As such, within each of these little independent units, we find all important functions viz. production, marketing, finance and human resources.
Presentation Title
HYBRID STRUCTURE
The hybrid form combines features of both functional and divisional forms. When an organization starts to get very large, it establishes some self-contained units. Functions that are considered important to each product are decentralized to the units; however, some functions like finance and accounting are centralized at headquarters for practical reasons.
Presentation Title
© Copyright PCTI Group 2009
Advantages of Hybrid Structure
1. The overall organization enjoys the benefits of both functional and product (decentralized) structures.
2. It provides the opportunity to improve coordination both within and among divisions.
3. It enables the organization to pursue an adaptive strategy within the product divisions while at the same time achieving efficiency in the functional departments.
4. It helps in proper alignment of corporate and divisional goals.
Presentation Title
FORMAL ORGANISATION
The formal organization structure refers to a structure of clearly defined jobs, each bearing a definite amount of responsibility and authority. The formal organization lays down formal procedures, rules and regulations, which guide the behavior of individuals performing these jobs.
Presentation Title
INFORMAL ORGANISATION
The informal organization is the outcome of social interaction that takes place organization. When people work together they tend to form informal work groups, often spontaneously, because of physical proximity, commonality of interest etc. These informal groups are collectively known as informal organization. Unlike the formal organization, the informal organization is unstructured and not given. Generally, it is an unofficial organization born out of a formal organization. An informal organization has its own structure, roles, procedures, norms and values which are unwritten and are evolved through consensus among the members of the informal groups. An informal organization does not have a fixed chain of command. It is based on the sentiments of the members. The communication patterns are not fixed and as such communication may flow in any direction.
Presentation Title
CENTRALISATION
The term Centralization refers to concentration of decision making at a single point in the organization. In contrast, when the top management gives maximum, though not complete, discretion to the lower level personnel in the organization to make decisions, then it can be said that there is decentralization in the organization.
Presentation Title
DECENTRALISATION
In a decentralized organization, action can be taken more quickly to solve problems, and more people provide inputs into decisions. For firms having a number of plants, which are located at different places, decentralization is more beneficial. With most of the large companies now preferring to make organizations more flexible and responsive, there has been a marked change towards decentralized decision making.
Presentation Title
Advantages of Decentralization
It reduces the burden of the top management by freeing them from many operational decisions, and enables them to concentrate on their strategic responsibilities; and
2. It can contribute to staff motivation by enabling middle and lower level managements to get a taste of responsibility, and by encouraging the use of knowledge, innovation, and initiative by all employees.
Presentation Title
Disadvantages of Decentralization
1. It requires greater coordination by senior management to ensure that individual units in the organization are not working against the interests of the whole organization;
2. It can lead to inconsistency of treatment of customers, clients or public, especially in service industries; and
3. Decentralization does require a plentiful supply of capable and well-motivated managers, who are able to cope with increased responsibility which decentralization brings about.
Presentation Title
VERTICAL STRUCTURE
A vertical organization is that in which the size of the hierarchical chain of command is long i.e. the number of hierarchical levels are high. As such, more people have to communicate to the top management through the intervening layers of executives.
Presentation Title
Advantages of the Vertical Organization
1. They provide better communication of the organization's mission, values, and goals to all employees; and
2. These organizations have the ability to sustain a very high degree of specialization of functions and roles.
Presentation Title
Disadvantages of the Vertical Organization
1. Too many hierarchical levels consume more time for communication and the same may lead to delays in decision making; and
2. As the vertical structures go hand in hand with formality and standardization, the scope for initiative and risk taking at operational levels becomes limited.
Presentation Title
As the traditional vertical, hierarchical structures of the organizations are being considered inappropriate to the requirements of the changing environment, an increasing number of modern organizations are preferring the use of horizontal structures. The horizontal structure facilitates cooperation, teamwork, and customer orientation rather than a functional orientation.
Presentation Title
Characteristics of the Horizontal Structure
1. Horizontal structures are created around three to five core processes for the time rather than traditional departmental functions.
2. The vertical hierarchy is flattened to reduce the levels of supervision. This is done by combining the fragmented tasks, eliminating work that fails to add value, and by cutting to the minimum activities within each process.
Presentation Title
3. Multi-disciplinary/ cross functional self-managed teams (composed of personnel from different functional areas like finance, marketing, human resource, quality control and operations) are created to handle the core processes, and each team is entrusted with a core process.
4. Customer satisfaction, net profits, is the primary driver and measure of performance. As such, for horizontal structure to work, employees are brought into direct contact with customers as well as suppliers. Where relevant, customers and suppliers may be brought in as full working members of the teams in charge of the core processes.
Presentation Title
© Copyright PCTI Group 2009
5. All employees should be provided with all data, and they should be trained for analyzing and use the data to make effective decisions as team members.
6. All employees are encouraged to develop multiple skills; and those who develop are rewarded.
7. The horizontal organizations need to build a corporate culture of openness,cooperation and collaboration.
Presentation Title
PROJECT ORGANISATION
When an organization undertakes a big project or a number of small projects, it creates project organization(s) for the completion of the same. This is done because the existing functional structure of the organization may not be suitable to complete the projects which are time bound and are subject to high standards of performance as in the case of aero space and aircraft companies.
Presentation Title
Advantages of the Project Organization
1. The participating specialists of the project team get opportunity for prompt,expeditious and effective accomplishment of the goals of the project. This motivates them to make maximum contribution to the execution of the project;
2. It facilitates speedy communication between the project manager and the team members; and
3. It provides flexibility in handling various tasks.
Presentation Title
© Copyright PCTI Group 2009
The matrix organization combines two forms of departmentalization— functional and product. It is built around a project which is headed by a Project Manager. The Project Manager is also known as Product Manager as he is responsible for the output (product) of the project.
The employees of the matrix have two bosses: their Functional Departmental Managers (for example, the HR specialists of the project team have to report to the Manager, Human Resources Department) and their Project Manager. In other words, the matrix structure breaks the principle of unity-of-command which states that no person in the organization should report to more than one boss.
Presentation Title
© Copyright PCTI Group 2009
Advantages of Matrix organization
1. It facilitates coordination when the organization has multiple complex and interdependent activities;
2. It ensures the effective utilization of the services of the people with highly specialized skills; and
3. The direct and frequent contact between the different functional specialists in the matrix ensures better communication and more flexibility.
Presentation Title
VIRTUAL ORGANISATION
A virtual organization is a small, core organization that outsourcers major business functions. It is highly centralized, with little or no departmentalization. The virtual organization creates network relationships with other organizations / agencies located anywhere in the world for the purpose of contracting out functions like manufacturing, distribution, marketing, R & D, etc.
Presentation Title
© Copyright PCTI Group 2009
The partners are less permanent, less formal, and more opportunistic. Each partner contributes to the virtual organization its core capabilities. The managers of the virtual organizations spend most of their time in coordinating the various activities through the networking. Examples of virtual organizations include Ford, Harley Davidson, Nike, Reebok, Mobil Corp., IBM etc.
Presentation Title
General Electric Chairman, Jack Welch, coined the term boundaryless organization. The boundaryless organization seeks to remove the vertical and horizontal boundaries within the organization and to break down external barriers between the company and its customers and suppliers. Once the management removes the vertical boundaries, the structure of the organization looks more like a silo than a pyramid.
Presentation Title
1. It fosters teamwork among the employees;
2. It ensures speedy communication within the organization (intra-organizational communication) and between the organization and the customers and suppliers (inter-organizational communication); and
3. It can help competitiveness in the global economy.
Presentation Title…
Presentation Title
INTRODUCTION
Organization is a principle of life. We seek the help of organizations to meetour day to day requirements such as to feeding, clothing, educating ,entertaining, protecting etc. However, organizations are not contemporary creations. Organizations are as old as human race
Presentation Title
DEFINITION
The term organization is derived from the Greek word organon i.e., tool or instrument. It is often been understood as the embodiment of persistent efforts to coordinate, influence and control human behavior in order to reach some desired result. According to Chester I. Bernard, an organization is “a system of consciously co-coordinated activities or forces of two or more persons”.
Presentation Title
The Organisation is Differentiated Internally
The Organisation is Legitimate
The Organisation is Flexible
Presentation Title
ORGANIZATION AS SYSTEM
A system is a set of integrated and mutually dependent parts arranged in a manner that produces a unified whole. It has been defined as “ an arrangement of interrelated parts. The words arrangement and interrelated describes the interdependent elements forming an entity that is the system.
Components of Organization System: Organizations are systems of some interacting components. Levitt (1965) sets out a basic framework for understanding organizations. This framework emphasizes four major internal components such as: task, people, technology, and structure.
Presentation Title
The Organization As An Open System
There are two basic types of systems: open and closed. A closed system is one that is self-contained and isolated from its environment. An open system is one which constantly interacts with the environment. In the strictest sense, every worldly system is partly closed and partly open. Closed systems exist only in theory, for all real systems interact with their environment.
Presentation Title
Goals and values, technical, psychosocial, technical, structural, and managerial, which are dependent on each other.
Organization, like organisms, are “open” to their environment and strive to attain an appropriate relation with that environment in order to survive.
As an open system, it influences and is influenced by the environment through the process of interdependency, which results in a dynamic (changing) equilibrium.
Like other open systems , the organization system may be expressed in terms of input-output mechanisms. All systems transform inputs into outputs.
The system is viewed as a transformation process in dynamic interaction with its environment.
Presentation Title
Organisms:Living systems, environmental conditions, adaptation, life cycles, recycling, needs,homeostasis, evolution, survival of the fittest, health, illness.
Brains:Learning, parallel information processing, distributed control, mindsets, intelligence,feedback, requisite variety, knowledge, networks.
Presentation Title
Political Systems:Interests and rights, power, hidden agendas and back room deals, authority,alliances, party-line, censorship, gatekeepers, leaders, conflict management.
Psychic Prisons:Conscious & unconscious processes, repression & regression, ego, denial,projection, coping & defence mechanisms, pain & pleasure principle, dysfunction,workaholics.
Presentation Title
Instruments of Domination:Alienation, repression, imposing values, compliance, charisma, maintenance of power, force, exploitation, divide and rule, discrimination, corporate interest.
Presentation Title
7Ss MODEL
The Seven S Framework was first appeared in “The Art Of Japanese Management” by Richard Pascale and Anthony Athos in 1981. It was born at a meeting of the four authors namely Richard Pascale, Anthony Athos, Tom Peters, and Robert Waterman in 1978 and come into sight in “In Search of Excellence” by Peters and Waterman. The global management consultancy McKinsey has taken up it as a basic tool , therefore at times it is known as the McKinsey 7S Model.
Presentation Title
ORGANIZATION DESIGN
The term ‘organizational design’ refers to how various parts of the organization and the distinct elements are brought together to make it. It considers both, how these elements match together and ways in which they may be analyzed and improved.
Presentation Title
ORGANIZATION DESIGN
to support the organization’s strategy. The structure should be designed in such a way as to assure the realization of the organization’s goals and objectives;
to arrange resources in the most efficient and effective way;
to provide for the effective division of tasks and accountabilities among individuals and groups;
to ensure effective co-ordination of the organization’s activities and clarify the decision-making processes;
Presentation Title
© Copyright PCTI Group 2009
to enhance and elucidate the lines of communication up, down and across the organization; to permit for the effective monitoring and review of the organization’s activities;
to endow with mechanisms for coping with change in markets, products and the internal and external environments;
to aid the handling of crises and problems;
to help to motivate, manage and give job satisfaction to individual members of the organization; and
to provide for management succession
Presentation Title
ORGANIZATIONAL DESIGN
The various parts of the structure should be divided into specialist areas. These specialist areas need to be interlinked.
The number of levels in the structure, sometimes referred to as the scalar chain, should be as few as possible.
The span of control, i.e, the number of subordinates directly managed, will vary according to the nature of the jobs and the organization, but it should not be so narrow that it results in a structure with too many levels, or too broad to allow effective management.
Presentation Title
© Copyright PCTI Group 2009
There should be what has been described as unity of command. For this the reporting positions and authority need to be clearly defined.
Every post in the structure should have a clear role and add value to the way the organization functions.
The extent to which the organization should be centralized or decentralized will need to be determined by reference to a number of factors. These include, the nature and type of industry, geographical dispersion, history, environment, resources available etc.
The structure must be designed to take account of changes in the environment, which can include the economy, legislation, markets, technological developments, geography, cultural environment, and social environment.
Presentation Title
© Copyright PCTI Group 2009
THEORIES OF ORGANIZATION DESIGN
Basically, there are two theories of organization design : universalistic & contingency theories. The universalistic theory assumes that there is “one best way” to organize. It means the maximum organizational performance comes from the maximum level of a structural variable, for instance, specialization (Taylor, 1947). Classical management is an earlier organizational theory that argue that maximum organizational performance results from maximum formalization and specialization and it is therefore a universalistic type of theory.Similarly, neo-human relations is also an earlier universalistic type of organizational theory, which claims that organizational performance is maximized by maximizing participation
Presentation Title
Size: Large Small
Technology: Task interdependence
Differentiation occurs through division of labor and technical specialization. Integration occurs when specialists cooperate to achieve a common goal. In the Lawrence and Lorsch model, integration can be achieved through various combinations of the following six mechanisms: (1) a formal hierarchy; (2) standardized policies, rules, and procedures; (3) departmentalization; (4) committees and cross-functional teams; (5) human relations training, and (6) individuals and groups acting as liaisons between specialists. When Lawrence and Lorsch studied successful and unsuccessful companies in three industries, they concluded that: As environment complexity increased, successful organizations exhibited higher degree of both differentiation and integration.
Presentation Title
Dynamism
Dynamism relates to the stability or instability of the environment. Several authors have identified dynamism as one of the major environmental contingencies of organizations (Child 1975; Duncan 1972; Thompson 1967). Dess and Beard (1984) emphasize that dynamism is not simply the rate of change, which itself could be constant, thereby rendering the environment predictable, but rather the degree of unpredictability. As they state, “Dynamism should be restricted to change that is hard to predict and that heightens uncertainty for key organizational members”. This corroborates the significance of uncertainty as a strategic element of dynamism.
Presentation Title
ORGANIZATIONAL EFFECTIVENESS
Organizations are constructed to be the most effective and efficient social units. The actual effectiveness of a specific organization is determined by the degree to which it realizes its goals. The efficiency of an organization is measured by the amount of resources used to produce a unit of output. Output is usually closely related to, but not identical with, the organizational goals. For instance, Ford produces automobiles (its output), but its goal seems to be profit-making.The unit of output is a measurable quantity of whatever the organization may be producing.
Presentation Title
BLOCK-II
Presentation Title
UNIT-3 TYPOLOGY OF ORGANIZATION STRUCTURES
An organization structure specifies the various job tasks and shows how the same are formally divided, grouped, and coordinated. It provides an appropriate framework for authority relationship. It indicates the hierarchy of authority and the reporting relationships.
Presentation Title
© Copyright PCTI Group 2009
Today’s managers realize that the traditional organization structures based on bureaucratic principles no longer provide solutions to the challenges posed by the new paradigm environment. The needs of flexibility, adaptability to change, creativity, innovation, knowledge and the ability to overcome environmental uncertainties are among the biggest challenges facing many of the organizations. The result has been that the vertical (tall) structures are being replaced by horizontal (flat) structures, the organizations with mechanistic structures are being transformed into ones with organic structure .
Presentation Title
Line Organization
Line organization is the simplest form of organization structure. The line structure is based on the scalar principle, which states that authority and responsibility should flow in a direct line vertically from the highest level of the organization to the lowest level. The primary emphasis in the line organization is upon the superior-subordinate relationship.
Presentation Title
© Copyright PCTI Group 2009
Most business organizations, except the very small, have this type of structure. As the organizations have grown complex, the problems of line executives have become sufficiently complicated. The line executives being generalists, need the advice of personnel with specialized knowledge and functions to tackle these problems. For this purpose, the staff positions are created in the organization. In line and staff organization, the line authority remains the same as it does in the line organization i.e. the authority flows from top to bottom; and the line executives perform the major functions; the staff functionaries support and advise the line executives.
Presentation Title
© Copyright PCTI Group 2009
This is the most widely used form of organization structure because of its simple logic and commonsense appeal. Here the tasks are grouped together on the basis of common functions. So, all production activities or all financial activities are grouped into a single function which undertakes all the tasks required of that function.
Presentation Title
© Copyright PCTI Group 2009
This form of organization structure is adopted by large companies producing a wide range of products. Here, the activities are grouped on the basis of the individual products manufactured by the company. Thus, one finds autonomous “little companies within the company” adopting this type of organization structure. As such, within each of these little independent units, we find all important functions viz. production, marketing, finance and human resources.
Presentation Title
HYBRID STRUCTURE
The hybrid form combines features of both functional and divisional forms. When an organization starts to get very large, it establishes some self-contained units. Functions that are considered important to each product are decentralized to the units; however, some functions like finance and accounting are centralized at headquarters for practical reasons.
Presentation Title
© Copyright PCTI Group 2009
Advantages of Hybrid Structure
1. The overall organization enjoys the benefits of both functional and product (decentralized) structures.
2. It provides the opportunity to improve coordination both within and among divisions.
3. It enables the organization to pursue an adaptive strategy within the product divisions while at the same time achieving efficiency in the functional departments.
4. It helps in proper alignment of corporate and divisional goals.
Presentation Title
FORMAL ORGANISATION
The formal organization structure refers to a structure of clearly defined jobs, each bearing a definite amount of responsibility and authority. The formal organization lays down formal procedures, rules and regulations, which guide the behavior of individuals performing these jobs.
Presentation Title
INFORMAL ORGANISATION
The informal organization is the outcome of social interaction that takes place organization. When people work together they tend to form informal work groups, often spontaneously, because of physical proximity, commonality of interest etc. These informal groups are collectively known as informal organization. Unlike the formal organization, the informal organization is unstructured and not given. Generally, it is an unofficial organization born out of a formal organization. An informal organization has its own structure, roles, procedures, norms and values which are unwritten and are evolved through consensus among the members of the informal groups. An informal organization does not have a fixed chain of command. It is based on the sentiments of the members. The communication patterns are not fixed and as such communication may flow in any direction.
Presentation Title
CENTRALISATION
The term Centralization refers to concentration of decision making at a single point in the organization. In contrast, when the top management gives maximum, though not complete, discretion to the lower level personnel in the organization to make decisions, then it can be said that there is decentralization in the organization.
Presentation Title
DECENTRALISATION
In a decentralized organization, action can be taken more quickly to solve problems, and more people provide inputs into decisions. For firms having a number of plants, which are located at different places, decentralization is more beneficial. With most of the large companies now preferring to make organizations more flexible and responsive, there has been a marked change towards decentralized decision making.
Presentation Title
Advantages of Decentralization
It reduces the burden of the top management by freeing them from many operational decisions, and enables them to concentrate on their strategic responsibilities; and
2. It can contribute to staff motivation by enabling middle and lower level managements to get a taste of responsibility, and by encouraging the use of knowledge, innovation, and initiative by all employees.
Presentation Title
Disadvantages of Decentralization
1. It requires greater coordination by senior management to ensure that individual units in the organization are not working against the interests of the whole organization;
2. It can lead to inconsistency of treatment of customers, clients or public, especially in service industries; and
3. Decentralization does require a plentiful supply of capable and well-motivated managers, who are able to cope with increased responsibility which decentralization brings about.
Presentation Title
VERTICAL STRUCTURE
A vertical organization is that in which the size of the hierarchical chain of command is long i.e. the number of hierarchical levels are high. As such, more people have to communicate to the top management through the intervening layers of executives.
Presentation Title
Advantages of the Vertical Organization
1. They provide better communication of the organization's mission, values, and goals to all employees; and
2. These organizations have the ability to sustain a very high degree of specialization of functions and roles.
Presentation Title
Disadvantages of the Vertical Organization
1. Too many hierarchical levels consume more time for communication and the same may lead to delays in decision making; and
2. As the vertical structures go hand in hand with formality and standardization, the scope for initiative and risk taking at operational levels becomes limited.
Presentation Title
As the traditional vertical, hierarchical structures of the organizations are being considered inappropriate to the requirements of the changing environment, an increasing number of modern organizations are preferring the use of horizontal structures. The horizontal structure facilitates cooperation, teamwork, and customer orientation rather than a functional orientation.
Presentation Title
Characteristics of the Horizontal Structure
1. Horizontal structures are created around three to five core processes for the time rather than traditional departmental functions.
2. The vertical hierarchy is flattened to reduce the levels of supervision. This is done by combining the fragmented tasks, eliminating work that fails to add value, and by cutting to the minimum activities within each process.
Presentation Title
3. Multi-disciplinary/ cross functional self-managed teams (composed of personnel from different functional areas like finance, marketing, human resource, quality control and operations) are created to handle the core processes, and each team is entrusted with a core process.
4. Customer satisfaction, net profits, is the primary driver and measure of performance. As such, for horizontal structure to work, employees are brought into direct contact with customers as well as suppliers. Where relevant, customers and suppliers may be brought in as full working members of the teams in charge of the core processes.
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5. All employees should be provided with all data, and they should be trained for analyzing and use the data to make effective decisions as team members.
6. All employees are encouraged to develop multiple skills; and those who develop are rewarded.
7. The horizontal organizations need to build a corporate culture of openness,cooperation and collaboration.
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PROJECT ORGANISATION
When an organization undertakes a big project or a number of small projects, it creates project organization(s) for the completion of the same. This is done because the existing functional structure of the organization may not be suitable to complete the projects which are time bound and are subject to high standards of performance as in the case of aero space and aircraft companies.
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Advantages of the Project Organization
1. The participating specialists of the project team get opportunity for prompt,expeditious and effective accomplishment of the goals of the project. This motivates them to make maximum contribution to the execution of the project;
2. It facilitates speedy communication between the project manager and the team members; and
3. It provides flexibility in handling various tasks.
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© Copyright PCTI Group 2009
The matrix organization combines two forms of departmentalization— functional and product. It is built around a project which is headed by a Project Manager. The Project Manager is also known as Product Manager as he is responsible for the output (product) of the project.
The employees of the matrix have two bosses: their Functional Departmental Managers (for example, the HR specialists of the project team have to report to the Manager, Human Resources Department) and their Project Manager. In other words, the matrix structure breaks the principle of unity-of-command which states that no person in the organization should report to more than one boss.
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© Copyright PCTI Group 2009
Advantages of Matrix organization
1. It facilitates coordination when the organization has multiple complex and interdependent activities;
2. It ensures the effective utilization of the services of the people with highly specialized skills; and
3. The direct and frequent contact between the different functional specialists in the matrix ensures better communication and more flexibility.
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VIRTUAL ORGANISATION
A virtual organization is a small, core organization that outsourcers major business functions. It is highly centralized, with little or no departmentalization. The virtual organization creates network relationships with other organizations / agencies located anywhere in the world for the purpose of contracting out functions like manufacturing, distribution, marketing, R & D, etc.
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The partners are less permanent, less formal, and more opportunistic. Each partner contributes to the virtual organization its core capabilities. The managers of the virtual organizations spend most of their time in coordinating the various activities through the networking. Examples of virtual organizations include Ford, Harley Davidson, Nike, Reebok, Mobil Corp., IBM etc.
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General Electric Chairman, Jack Welch, coined the term boundaryless organization. The boundaryless organization seeks to remove the vertical and horizontal boundaries within the organization and to break down external barriers between the company and its customers and suppliers. Once the management removes the vertical boundaries, the structure of the organization looks more like a silo than a pyramid.
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1. It fosters teamwork among the employees;
2. It ensures speedy communication within the organization (intra-organizational communication) and between the organization and the customers and suppliers (inter-organizational communication); and
3. It can help competitiveness in the global economy.
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