Designing Organisational Structures

8/14/2019 Designing Organisational Structures

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UNIT II

DESIGNING

ORGANIZATIONAL

STRUCTURES


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BASIC CONCEPTS RELATED TO

ORGANIZATION

The term organization is used in thefollowing ways:

Organization as Entity Organization as Group of people Organization as Structure

Organization as process


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DEPARTMENTATION

The first real task in designing anorganization structure is the

identification of activities and groupthem properly.

The process of grouping activities iscommonly known as Departmentation.


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NEED for DEPARTMENTATION

The basic need for departmentationarises because of specialization of workand the limitation on the number ofsubordinates that can be directly

controlled by a supervisor.


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IMPORTANCE OF

DEPARTMENTATION

1. Advantages of Specialization

2. Fixation of Responsibility3. Development of Managers

4. Facility in Appraisal

5. Feeling of Autonomy


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BASES OF DEPARTMENTATION

The most commonly used bases are:

1. Function2. Product

3. Territory

4. Process

5. Customer


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FUNCTIONAL DEPARTMENTATION

Board of Directors

MANAGING DIRECTOR

PRODUCTION MARKETING FINANCE PERSONNEL

MARKET RESEARCH ADVERTISING SALES

NEWS PAPERS

MAGAZINES

RADIO

TV


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PRODUCT DEPARTMENTATION

Chief Executive

Car Division Truck Division Bus Division

MARKETINGPRODUCTION FINANCE PERSONNEL


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TERRITORIAL

DEPARTMENTATION

Head Office

EASTERNZONE

CENTRALZONE

NORTHERNZONE

SOUTHERN

ZONE

WESTERN

ZONE

DIVISION 1 DIVISION 2 DIVISION 3 DIVISION 4

BRANCH 1 BRANCH 2


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PROCESS DEPARTMENTATION

MANAGER

(Production)

SPINNING DYEING WEAVING FINISHING


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CUSTOMER DEPARTMENTATION

MANAGER

(Production)

MARKETING

MANAGER

Whole Sale Retail Hire

PurchaseExport


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DECENTRALIZATION

Decentralization applies to thesystematic delegation of authority in an

organization-wide context.

Decentralization is used to denote

dispersal of physical facilities place-wiseor function-wise.


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FACTORS DETERMINING DEGREE

OF DECENTRALIZATION

Size of Organization History of Organization

Management Philosophy Availability of Managers Pattern of Planning Control Techniques

Decentralized Activities Rate of change in organization Environmental Influences


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LINE ORGANIZATION

Line Organization structure is alsoknown as scalar, military or vertical

organization and perhaps is the oldestform.

This concept holds that in anyorganization or hierarchy derived from ascalar process, there must be a singlehead who commands it.


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LINE ORGANIZATION (contd)

Line Organization can be designed in two ways:

1. Pure Line Organization: Similar activities areperformed at a particular level.

2. Departmental Line Organization: Entireactivities are divided into different

departments on the basis of similarity ofactivities.


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PURE LINE ORGANIZATION

Chief ExecutiveChief Executive

FOREMAN A FOREMAN B FOREMAN C

Workers Workers Workers


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DEPARTMENTAL LINE

ORGANIZATION

Production

Manager

Foreman

(Spinning)

Foreman

(Weaving)

Foreman

(Dyeing)

Foreman

(Finishing)

WorkersWorkersWorkers Workers


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CHARACTERISTICS OF LINE

ORGANIZATION

Lines of authority and instructions arevertical.

The unity of command is maintained in astraight and unbroken line. All persons of the same organization are

independent of each other.

This structure specifies responsibility andauthority for all positions limiting the area ofaction by a particular position holder.


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MERITS OF LINE ORGANIZATION

Simplicity

Discipline

Prompt Decision Orderly communication

Easy supervision and control

Economical Overall development of Managers


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DE MERITS OF LINE

ORGANIZATION

X Lack of Specialization

X Absence of Conceptual ThinkingX Autocratic Approach

X Problems of Coordination

X Lack of Ground work for subordinatesTraining


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LINE AND STAFF ORGANIZATION

It refers to a pattern in which staffspecialists advise line managers toperform their duties.

In actual practice, sometimes it is

difficult to determine which departmentsare line or staff.


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The problem can usually be solved byclassifying activities within an

organization in two ways:

1. That which is substantive (direct) in itscontribution Line activities

2. That which is objective (indirect) in itscontribution Staff activities


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GENRAL MANAGER Public Relations

OfficerSecretary

Manager (Finance) Manager (personnel)

Manager - Production Manager - Marketing

Production Engineer Production Engineer

Workers Workers


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MERITS & DEMERITS OF LINE AND

STAFF ORGANIZATION

MERITS: Planned Specialization

Quality Decisions

Prospect for Personal Growth Training Ground for Personnel

DEMERITS:

X Lack of well defined Authority

X Line and Staff conflicts


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FUNCTIONAL ORGANIZATION

It is created by grouping the activities on the basis

of functions required for the achievement oforganizational objectives.

CHARACTERISTICS:

1. Specialization by functions

2. Emphasis on sub-goals

3. Pyramidal growth of Organization

4. Line and staff division5. Limited span of management

6. Functional authority relationships among departments


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FUNCTIONAL ORGANIZATION

Head Quarters

Production Marketing Finance Personnel

Plant 1 Plant 2 Plant 3

P M F P P PM MF FP P


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COMMITTEE ORGANIZATION

It can be defined as a body of personsappointed to meet on an organized basis forthe discussion and dealing of matters brought

before it.

FEATURES:

1. Group of persons

2. Can deliberate only on matters that arebrought before it

3. Members of the committee draw authoritythrough delegation.


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MATRIX ORGANIZATION

Matrix Organization is the realization

of two-dimensional structure whichemanates directly from two dimensionsof authority.

1. Pure project structure

2. Functional structure


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VIRTUAL ORGANIZATION

Virtual Organization is a temporary networkof independent companies suppliers,customers, even erstwhile rivals linked byinformation technology to share skills, costsand access to one anothers markets.

It will have neither central office nor

organization chart. It will have no hierarchy, novertical integration.


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CELLULAR ORGANIZATION

It is a form of organization consisting of acollection of self-managing firms or cells held

together by mutual interest. A cellularorganization is built on the principles of self-organization, member ownership, andentrepreneurship.

Each cell within the organization sharescommon features and purposes with its sistercells but is also able to function independently.


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TEAM STRUCTURE

A Team is a group of people in theorganization constituted for completing

certain assignments.TYPES:

1. Lead Team

2. Cross-functional Team

3. Problem-solving Team

4. Self-managing Team


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BOUNDARYLESS ORGANIZATION

It is a model that views organizations as havingpermeable boundaries. An organization hasexternal boundaries that separate it from its

suppliers and customers, and internalboundaries that provide demarcation todepartments.

This rigidity is removed in boundaryless

organizations, where the goal is to developgreater flexibility and responsiveness to changeand to facilitate the free exchange ofinformation and ideas.


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BOUNDARYLESS ORGANIZATION

The concept was developed at

General Electric and described in thebook The Boundaryless Organization:Breaking the Chains of OrganizationalStructure by Ron Ashkenas and others,

which was published in 1995.


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FLAT ORGANIZATION

Flat structure is that which reducesthe levels of management, widens spanof control of managers at various levelsof the organization, and is often moredecentralized with regard to decision

making autonomy.

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Designing Organisational Structures