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Organizational Design by Soumyaa Srikrishna Organizational Structure, Span of Control, Delegation, Differentiation, Integration, Coordination, Impacts of Technology
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Organizational
DesignSOUMYAA SRIKRISHNA
Definition
“creation of roles, processes, and formal reporting relationships in anorganization.”
“the framework through which an organization aims to realize itscore qualities as specified in its vision statement. It provides theinfrastructure into which business processes are deployed and ensuresthat the organization's core qualities are realized across the businessprocesses deployed within the organization.”
Strategy
Structure
Business Process &
Lateral Links
Reward Systems
Human Resource
Management
Galbraith's Star Model of organizational design
Strategic Grouping
Behavior
Function
Product or category
Customer or market
Geography
Matrix
Characteristics of Effective Organizational Design
Simplicity
Flexibility
Reliability
Economy
Acceptability
Importance
improve communication,
increase productivity,
inspire innovation
Challenges
Unworkable job
Politics
Over-regulation
Applying for your job
Cultural clashes
Hierarchy
Hierarchy refers to the authority
levels of the organizational
pyramid
œ An authority structure is the glue
that holds the levels of an
organization together
œ Most executives today believe
that fewer layers create a more
efficient, fast-acting, and cost
effective organization
Senior Management
Middle Management
Lower Management
Span of Control
Span of Control
Refers to the number of subordinates who report directly to an executive or supervisor
The differences in the span of control have direct implications on the shape of the organization :
Tall organizations:
span of control remains constant, or narrow
œFlat organizations:
span of control is wide with fewer reporting levels
Organizations must find the optimal span of control to be effective
œNarrow enough to permit manages to maintain control over subordinates
Wide enough so that the possibility of micromanaging is minimized
The optimal span of control is dependant on the following factors
œis the work clearly defined
œAre subordinates highly trained and do they have access to information
œIs the manager highly capable and supportive
œAre jobs similar and performance measures comparable
Do subordinates prefer autonomy to close supervisory control
Delegation
Delegation refers to the assignment of new or additional
responsibilities to a subordinate
œDelegation is perhaps the most fundamental feature of
management because it entails getting work done
through others
œDelegation is important at all hierarchical levels
Define the Goal succinctly
Select the person for the task
Subordinate’s view on selected approach
Provide Resource, Time and Authority to perform the job
Schedule Check points for review
Follow through with discussion of progress at various levels
Differentiation & Integration
Differentiation
“Differentiation is the process of deciding how to divide the work in an organization. It ensures that all essential tasks are assigned to jobs and will be accomplished. “
Dimensions of differentiation:
1. Manager's goal orientation
2. Time orientation
3. Interpersonal orientation
4. Formality of structure.
Differentiation contd…
Horizontal differentiation:
the degree of differentiation between organizational subunits),
Vertical differentiation:
difference in authority and responsibility in the organizational hierarchy),
Spatial differentiation:
geographic dispersion of an organization’s offices, plants, and
personnel
Integration
Integration is the process of coordinating the different parts of an organization.
Vertical linkages integrate activities up and down the organizational
chain of command.
Horizontal linkages provide for communication and coordination across
jobs and departments. The flatter the organization, the more necessary
horizontal integration linkages become.
Centralization & Decentralization
Centralization
Centralizedorganizational structuresrely on one individual tomake decisions andprovide direction for thecompany. Smallbusinesses often use thisstructure since the owneris responsible for thecompany’s businessoperations.
Decentralization
Decentralizedorganizational structuresoften have severalindividuals responsible formaking business decisionsand running the business.Decentralizedorganizations rely on ateam environment atdifferent levels in thebusiness. Individuals ateach level in the businessmay have someautonomy to makebusiness decisions.
Advantages
Centralized
Centralized organizations canbe extremely efficientregarding business decisions.Business owners typicallydevelop the company’smission and vision, and setobjectives for managers andemployees to follow when
achieving these goals.
Decentralized
Decentralized organizations utilize individuals with a variety of expertise and knowledge for running various business operations. A broad-based management team helps to ensure the company has knowledgeable directors or
managers to handle various types of business situations.
Disadvantages
Centralized
Centralized organizations can
suffer from the negative effects of
several layers of bureaucracy.
These businesses often have
multiple management layers
stretching from the owner down to
frontline operations. Business
owners responsible for making
every decision in the company
may require more time to
accomplish these tasks, which can
result in sluggish business
operations.
Decentralized
Decentralized organizations can
struggle with multiple individuals
having different opinions on a
particular business decision. As
such, these businesses can face
difficulties trying to get everyone
on the same page when making
decisions.
Common Terms
. Standardization is the extent to which work
activities are accomplished in a routine fashion.
Specialization is the degree to which jobs are
narrowly defined and depend on unique expertise.
Formalization is the degree to which the
organization has official rules, regulations, and
procedures. An organization may have a formal
structure, but may operate informally.
Complexity refers to the number of different types of
activities that occur in the organization.
Coordination
Coordination by Standardization
When organizations coordinate activities by establishing
routines and standard operating procedures that remain
in place over time, we say that work has been
standardized
œTo improve coordination, organizations may also use
formalization
œ Presence of rules and regulations governing how people in the
organization interact
Coordination by Plan
Interdependent units are required to
meet deadlines and objectives that
contribute to a common goal
Coordination by Mutual Adjustment
The simplest and most flexible approach to
coordination
œUnits interact with one another to make
accommodations in order to achieve flexible
coordination
œ This approach may take more time than other
coordination models
Impacts
Technology
“the combination of skills, knowledge, abilities, techniques, materials, machines, computers, tools, and other equipment that people use to convert or change raw materials, problems, and new ideas into valuable goods and services”
Technology can have an impact on how your organization is structured
and how work flows.
When computer networks became popular, it became easier for people to
work as groups. People did not need to be in the same room, or even the
same building, to be efficient.
Technology can create positions within your company and it can eliminate
positions.
When filing is done electronically, there is no longer a need for as many file
clerks as you once had but there is a need for a department of technicians
to maintain and grow the computer network.
As technology continues to change the function of jobs in the workplace,
the landscape of organizational structure changes with it.
Environment
The strategies available to an organization are determined by its structure. Different strategies
are better suited to different environments. Thus, if an organization is to thrive its structure must fit the business environment in which it develops.
While there are no hard and fast rules, there are some environmental features that tend to have predefined effects on the organization.
Environments factors
Degree of Change
Complexity
Market Size and Resources
Coping Strategies
Network Organizations
Network (Virtual) Organizations
A network (or virtual) organization performs only certain
core functions and outsources the remaining functions to
other companies.
Consequently, the network organization is able to focus
on its core competencies doing what it does best.
The network organization is able to maintain greater
flexibility in responding to environmental demands.
Virtual OrganizationAdvantages
Each company in the network
business alliance focuses on its core
competencies.
Investment risk is spread across the
partners.
Resources can be used more wisely,
by directing them toward each
organization’s core competencies.
Each company maintains greater
flexibility to cope with an uncertain
environment.
Disadvantages
Lack of adequate communication
and coordination between the
network (or virtual) organization
and its partners will undermine the
effectiveness of the alliance.
The network organization, by
outsourcing significant functions,
increases its risk because it must
rely heavily on other businesses.
The network organization sacrifices
some degree of control.
Questions
© Soumyaa Srikrishna ([email protected])