Post on 09-Apr-2018
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Organizational Structureand Design
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Defining Organizational Structurey Organizational Structure
y The formal arrangement of jobs within an organization
y
Organizational Designy A process involving decisions about six key elements:
y Work specialization
y Departmentalization
y Chain of command
y Span of control
y Centralization and decentralization
y Formalization
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Purposes of Organizing
y Divides work to be done into specific jobs anddepartments
y
Assigns tasks and responsibilities associated withindividual jobs
y Coordinates diverse organizational tasks
y Establishes relationships among individuals,groups, and departments
y Establishes formal lines of authority
y Allocates organizational resources
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Designing Organizational Structure
yWork Specialization
y The degree to which tasks in the organization are
divided into separate jobs with each stepcompleted by a different person
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Departmentalization by Type
y Functional
y Grouping jobs by
functions performedy Product
y Grouping jobs byproduct line
yGeographicaly Grouping jobs on the
basis of territory orgeography
y Process
y Grouping jobs on the
basis of product orcustomer flow
y Customer
y Grouping jobs by type
of customer and needs
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Functional Departmentalization
Plant Manager
Manager,
Manufacturing
Manager,
Human Resources
Manager,
Accounting
Manager,
Engineering
Manager,
Purchasing
+ Efficiencies from putting together similar specialties and
people with common skills, knowledge, and orientations
+ Coordination within functional area
+ In-depth specialization
Poor communication across functional areas
Limited view of organizational goals
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Geographical
Departmentalization
Vice President
for Sales
Sales Director,Central Region
Sales Director,Southern Region
Sales Director,Western Region
Sales Director,Eastern Region
+ More effective and efficient handling of specific
regional issues that arise
+ Serve needs of unique geographic markets better
Duplication of functions
Can feel isolated from other organizational areas
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Product 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 Source: Bombardier Annual Report.
CEO.
Truck
Division
Car
Division
Bus
Division
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Process Departmentalization
+ More efficient flow of work activities
Can only be used with certain types of products
Plant
Manager
Spinning Dyeing Weaving Fininshing
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Customer Departmentalization
+ Customers needs and problems can be met by specialists
Duplication of functions
Limited view of organizational goals
Director
of Sales
Manager,
Wholesale Accounts
Manager,
Retail Accounts
Manager,
Government Accounts
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Organizational Structure (contd)
yChain of Command
y The continuous line of authority that extendsfrom upper levels of an organization to thelowest levels of the organization and clarifieswho reports to whom
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Organizational Structure (contd)y Authority
y The rights inherent in a managerial position to tell people whatto do and to expect them to do it
y
Responsibilityy The obligation or expectation to perform. Responsibility brings
with it accountability (the need to report and justify work tomanagers superiors)
y Unity of Commandy The concept that a person should have one boss and should
report only to that person
y Delegationy The assignment of authority to another person to carry out
specific duties
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Organizational Structure (contd)
y Line and Staff Authorityy Line managers are responsible for the essential
activities of the organization, includingproduction and sales. Line managers have theauthority to issue orders to those in the chainof commandy
The president, the production manager, and the salesmanager are examples of line managers
y Staff managers have advisory authority, andcannot issue orders to those in the chain ofcommand (except those in their own
department)
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Organizational Structure (contd)
y Span of Controly The number of employees who can be effectively and
efficiently supervised by a managery Width of span is affected by:
y Skills and abilities of the manager and the employeesy Characteristics of the work being doney Similarity of tasksy Complexity of tasks
y Physical proximity of subordinatesy Standardization of tasksy Sophistication of the organizations information systemy Strength of the organizations culturey Preferred style of the manager
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Organizational Structure (contd)
y Centralization
y The degree to which decision making is
concentrated at a single point in the organizationy Organizations in which top managers make all the
decisions and lower-level employees simply carry outthose orders
y Decentralization
y The degree to which lower-level employees provideinput or actually make decisions
y Employee Empowermenty Increasing the decision-making discretion of employees
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Organizational Structure (contd)
y Formalizationy The degree to which jobs within the organization
are standardized and the extent to whichemployee behavior is guided by rules andproceduresy Highly formalized jobs offer little discretion over what is to
be done
y Low formalization means fewer constraints on howemployees do their work
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Organizational Design Decisionsy Mechanistic Organization
y A rigid and tightlycontrolled structurey
High specializationy Rigid departmentalizationy Narrow spans of controly High formalizationy Limited information network
(mostly downwardcommunication)
y Low decision participation bylower-level employees
y Organic Organizationy Highly flexible and
adaptable structurey
Nonstandardized jobsy Fluid team-based structurey Little direct supervisiony Minimal formal rulesy Open communication
networky Empowered employees
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Mechanistic Versus Organic
Organization
Mechanistic
High Specialization
Rigid Departmentalization
Clear Chain of Command
Narrow Spans of Control Centralization
High Formalization
Organic
Cross-Functional Teams
Cross-Hierarchical Teams
Free Flow of Information
Wide Spans of Control Decentralization
Low Formalization
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Structural Contingency Factors (contd)
y Strategy and StructureyAchievement of strategic goals is facilitated by
changes in organizational structure thataccommodate and support change
y Size and Structurey
As an organization grows larger, its structuretends to change from organic to mechanisticwith increased specialization,departmentalization, centralization, and rulesand regulations
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Structural Contingency Factors (contd)
y Technology and Structurey Organizations adapt their structures to their
technologyy Routine technology = mechanistic
organizations
y Nonroutine technology = organic
organizations
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Structural Contingency Factors (contd)
y Environmental Uncertainty and Structure
yM
echanistic organizational structures tend tobe most effective in stable and simpleenvironments
y The flexibility of organic organizational
structures is better suited for dynamic andcomplex environments
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Organizational DesignsOrganizational Designs
Traditional
-Simple Structure
-Functional
-Divisional
Contemporary
-Team
-Matrix-Project
-Boundary less
Learning Organization
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Common Organizational Designs
y Traditional Designsy Simple Structure
y Low departmentalization, wide spans of control, centralized
authority, little formalizationy Functional Structure
y Departmentalization by functiony Operations, finance, human resources, and product research and
development
y
Divisional Structurey Composed of separate business units or divisions with
limited autonomy under the coordination and control of theparent corporation
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Organizational Designs (contd)
yContemporary Organizational Designsy Team Structures
y The entire organization is made up of work groups or
self-managed teams of empowered employeesyMatrix Structures
y Specialists for different functional departments areassigned to work on projects led by project managers
y Matrix participants have two managers
y Project Structuresy Employees work continuously on projects, moving on
to another project as each project is completed
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AMatrix Organization in an
Aerospace Firm
DesignEngineering Manufacturing ContractAdministration Purchasing Accounting HumanResources (HR)
DesignGroup
AlphaProject
ManufacturingGroup
ContractGroup
PurchasingGroup
AccountingGroup
HRGroup
DesignGroup
BetaProject
ManufacturingGroup
ContractGroup
PurchasingGroup
AccountingGroup
HRGroup
Design
Group
Gamma
Project
Manufacturing
Group
Contract
Group
Purchasing
Group
Accounting
Group
HR
Group
DesignGroup
OmegaProject
ManufacturingGroup
ContractGroup
PurchasingGroup
AccountingGroup
HRGroup
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Organizational Designs (contd)yContemporary Organizational Designs
(contd)y
Boundaryless Organizationy A flexible and an unstructured organizational design
that is intended to break down external barriersbetween the organization and its customers andsuppliers
y
Removes internal (horizontal and vertical) boundariesy Eliminates external boundaries
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Organizational Designs (contd)y Learning Organization
y An organization that has developed the capacity tocontinuously learn, adapt, and change through the
practice of knowledge management by employeesy Characteristics of a learning organization:
y An open team-based organization design that empowersemployees
y Extensive and open information sharing
y Leadership that provides a shared vision of the organizationsfuture; support; and encouragement
y A strong culture of shared values, trust, openness, and a senseof community
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Co-ordinationy Linking of two or more organizational members
and/or work units so that they function well together
y
Two main types of co-ordination are:y Vertical coordination
y Horizontal Coordination
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yVertical Coordination:
Linking work units (individual, team, departments)
separated by hierarchical levely Horizontal Coordination:
Linking work units (individual, team, departments) atthe same hierarchical level
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Techniques for effective
coordinationy Coordination by chain of command
y Coordination by leadership
y Coordination by committeesy Staff meetings
y Special Coordinators
y Self- coordination
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Differentiationy Differences in attitudes and working styles, arising
naturally among members of different departments,
that can complicate coordination of an organization'sactivities.
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Integrationy The degree to which members of various departments
work together in a unified manner.
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A Definition ofPower
AB
Power
The ability to exert influence; that is,
the ability to change the attitudes or
behavior of individuals or groups .A
capacity that A has to influence thebehavior of B so that B acts inaccordance with As wishes.
Dependency
Bs relationship to A whenA possesses somethingthat B requires.
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Sources ofPower
Coercive Power
A power base dependent on fear.
Reward PowerCompliance achieved based onthe ability to distribute rewardsthat others view as valuable
Legitimate Power
The power a person receives as a result of his or her
position in the formal hierarchy of an organization.
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Sources ofPowerExpert Power
Influence based on specialskills or knowledge.
Referent Power
Influence based on possessionby an individual of desirableresources or personal traits.
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Dependency: The Key To Powery The General Dependency Postulate
y The greater Bs dependency on A, the greater the power A hasover B.
y Possession/control of scarce organizational resources thatothers need makes a manager powerful.
y Access to optional resources (e.g., multiple suppliers) reducesthe resource holders power.
y What Creates Dependency
y Importance of the resource to the organization
y Scarcityof the resource
y Nonsubstitutabilityof the resource
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Authority (mainly) derives from
roleyAuthority is the right to make an ultimate decision,
and in an organisation it refers to the right to makedecisions which are binding on others (Obholzer,1994).
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Line & StaffAuthority
y Line authority is the relationship in which asuperior exercises direct supervision over a
subordinatey Staff relationship is advisory
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Difference between Authority &
PowerPower Authority
y It is a ability to command &influence behavior of another
y It rests with persons, in their
individual capacitiesy It doesn't follow any hierarchy
y Power, being personalizedattribute, can not be delegated
y Emerges because of personal
factorsy May exist between any 2 persons
y It is institutional right tocommand
y It lies in managerial position
y It is hierarchical in nature
y It can be delegated
y Institutional & originates fromstructural relationship
y Superior-subordinaterelationship
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Delegationy Transfering formal authority from one position to
another is known as delegation
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The Delegation Process
Assign Tasks
Transfer task responsibility
Creation of responsibility
AcceptanceCondition
Accept
Reject
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Blocks to effective delegationy Factors in delegator:
y Love for authority
y Maintenance of tight control
y Fear of subordinates growth
y Fear of exposure
y Attitude towards subordinates
y Personality of superior
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Guides for Overcoming Weak Delegation
1. Define assignments and delegate authority inlight of results expected
2. Select the person in light of the job to be done
3. Maintain open lines of communication
4. Establish proper controls
5. Reward effective delegation and successfulassumption of authority
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Definition of Staffingy Staffing is filling, and keeping filled, positions in the
organization structure
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SITUATIONALFACTORS AFFECTING
STAFFINGy External factors include the level of education, the
prevailing attitudes in society (such as the attitudetoward work), the many laws and regulations thatdirectly affect staffing, the economic conditions, andthe supply of and demand for managers outside theenterprise
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SITUATIONALFACTORS AFFECTING
STAFFING cont.
y Internal factors that affect staffing include, forexample, organizational goals, tasks, technology,organization structure, the kinds of people
employed by the enterprise, the demand for andthe supply of managers within the enterprise, thereward system, and various kinds of policies
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The Human Resources
Management Process
Environment
Environment
Decruitment
RecruitmentHumanResourcePlanning
Selection
Orientation Training
PerformanceManagement
CareerDevelopment
CompensationandBenefits
Identification and Selectionof Competent Employees
Adapted and competentemployees with up-to-dateskills and knowledge
Competent and high-performing employees whoare capable of sustaining high performance overthe long term