Organizational Design & Structure

7/29/2019 Organizational Design & Structure

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ORGANIZATIONAL DESIGNAND STRUCTURE

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Business & Organization

Business It means investment for a purpose, products & service,

customers, vendors, competition, environment, growth, profitability, ROI

etc.

Organization It means Vision, mission, strategy, structure, people,systems & processes, policies, rules & regulations, culture, leaders,

teams, motivation, morale, hierarchy, grades, designation, reward

system, corporate social responsibility etc.

Structure creates congruence between the Business and theOrganization and facilitates vertical and horizontal integration of Goals,

processes, functions etc

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ASSUMPTION / BASIC PREMISE FOR ORGANISATION

STRUCTURE

Structure which will

Support and sustain current business.

Absorb & integrate new business / acquisition / New products. Support expansion & growth across different locations.

To provide support for Global Supply Chain / Operation, if and when

required.

Manage & adapt to internal & external environmental change.

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This evolving structure should preserve the current advantages ofmanufacturing, flexibility, value propositions in terms of cost and quality, people

competence, autonomy & creativity.

ORGANISATION STRUCTURE

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Elements of Organizational Structure

Business Model

Business Objectives

(1 yr, 3 yrs, 5 yrs & long-term)

Strategy(What to do & how to do)

Structure

Roles, Responsibilities,

Objectives,

Accountability (RROA)

Staffing

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Performance Review,

Evaluation, Feedback, Training,

Rewards & Recognition


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Management

Development (Career

planning / succession

planning)

ANNUAL PLAN / POLICY DEPLOYMENT / PERFORMANCE MANAGEMENT SYSTEM

Company Annual Plan

Policy goals of the department heads

Execution through the PMS

(a). Performance Planning

(setting individual KRAs/goals of managers )

P

(b). Implementation &Monitoring

(like MIS, Coaching and Counselling, periodic

reviews and providing feedback )D

(c). Formal Performance Review through PA systems

( Quarterly, half yearly, annually)

(through Appraisal / Evaluation process / PRD)

C

CEO

HOD

A

Compensation

Review

Reward and

Recognition

Counseling T&D needs

identification

Managers

HODs

P = Plan D = Do C = Check A = Act 6


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Horizontal integration :-

Horizontal integration means aligning performance management strategies with other HR

strategies concerned with valuing, paying, involving and developing people.

PMS

InvolvingPeople

Developing

People

Valuing

People

Paying &

rewarding

people

Performance management as a focal point for integrated HR activities

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OC SS S O G S O


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PROCESS BASED ORGANISATION

( Process Matrix )

CUSTOMERS

CORPORATE GOALS

ORDER OBTAINMENT

GROUP

ORDER

FULFILMENT

NEW PRODUCT

DEVELOPMENT GROUP

(Marketing) (Supply Chain Group) (R&D)

PRODUCT MANAGEMENT GROUP

( 4 Ps Plus Interface with R&D, Field Sales Force, Production, QC, Processing,

Packing & Distribution)

PEOPLE DEVELOPMENT PROCESS / PROGRAM

(Performance Management System, Compensation System, Reward RecognitionSystem, Training & Development System)

FINANCE / ACCOUNTING

( Budgeting, Costing, Cash Flow,P & L, Balance Sheet, Taxation )

IT/ ERP

( MIS ,planning system, Order Processing ) 8


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4 Ps of Structure

Structure is made up of 4 Ps. They are as below:

Position Title / Designation, Level / Grade, Reporting

Relationships, Line of authority, Resources / facilities required etc.

Process (Part of a big system) Roles, Responsibilities,

Objectives & Accountability (Span of control in the process)

People Type / Quality of people, Experience, Competence etc.

Place Location of the position

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Structural Gap Identification

Steps:

Understanding and mapping the current structure Preparing what structure is ideally required / appropriate vis--vis

business strategy, plan, objectives (short-term & long-term)

Identify the gap between the two above in terms of 4Ps and

manpower ratios (Manager : Supervisor : Workmen)

Bridging the Gap

Internal incumbentthru training & development

External candidatethru recruitment process

Gap can be partial or full as given below:

Position exists but it is vacant

Position exists and the current incumbent is not 100% fit in terms

of competence

Position does not exist and therefore created as per gap analysis10


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Mapping the Current Structure

Structure to be mapped up to 3 - 4 levels at least i.e. -

Top / Sr. Management (Typical Directors / VPs)

HODs (Typical GMs / DGMs)

Managers (Typical Process / Sub-Process / Line Owners)

Supervisors (Shop floor Leaders/Field Leaders)

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Organizations Inputs

Organization obtains inputs

from its environment

Raw materials

Money and capital

Human resources

Information and knowledge

Customers of service

organizations

Organizations

Environment

Sales of outputs alloworganizations to obtain new

supplies of input

Customers

Shareholders

Suppliers

Distributors

Government

Competitors

Organizations Conversion

Process

Organization transforms

inputs and adds value to

them

Machinery

Computers

Human skills & abilities

Organizations outputs

Organization releases outputs

to its environment

Finished goods

Services

Dividends

Salaries

Value for stakeholders

How an Organization Creates Value

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Organizational Theory

The study of how organizations function and how they affect

and are affected by the environment in which they operate.

Organizational Structure

The formal system of task and

authority relationships that

controls how people are to

cooperate and use resources to

achieve the organizations goals.

Controls coordination and

motivation; shapes behavior of

people and the organization.

Is a response to contingencies

involving environment, technology,and human resources.

Evolves an organization grows

and differentiates.

Can be managed and changed

through the process of

organizational design.

Organizational Design and

Change

The process by which managers

select and manage various

dimensions and components oforganizational structure and

culture so that an organization can

control the activities necessary to

achieve its goals.

Balances the need of the

organization to manage external

and internal pressures so that it

can survive in the long run.

Allows the organization to

continually redesign and transform

its structure and culture to

respond to a changing global

environment.

Organizational Culture

The set of shared values and

norms that controls organizational

members interactions with each

other and with people outside theorganization.

Controls coordination and

motivation; shapes behavior of

people and the organization.

Is shaped by people, ethics, and

organizational structure.

Evolves as organization grows

and differentiates.

Can be managed and changed

through the process of

organizational design.

The Relationship Among Organizational Theory and Organizational Structure,

Culture, and Design, and Change

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Approaches to Measuring Organizational Effectiveness

APPROACH DESCRIPTION GOALS TO SET TO MEASURE

EFFECTIVENESS

External resource approach Evaluates the organizations ability to

secure, manage, and control scarce

and valued skills and resources

Lower costs of inputs

Obtain high-quality of inputs of raw

materials and employees

Increase market share

Increase stock price

Gain support of stakeholders such

as government or environmentalists

Cut decision-making time

Increase rate of product innovation

Increase coordination and

motivation of employees

Reduce conflict

Reduce time to market

Increase product quality

Reduce number of defects

Reduce production costs

Improve customer service

Reduce delivery time to customer

Internal systems approach Evaluates the organizations ability to

be innovative and function quickly and

responsively

Technical Approach Evaluates the organizations ability to

convert skills and resources into goods

and services efficiently

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Plant Structure

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Global Matrix Structure

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Global Product Group Structure

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Global Geographic Structure

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A Multidivisional Structure in Which Each Division Has a

Different Structure

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Link
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The Assignment of Product-Oriented Functional Teams to

Individual Divisions

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Head


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Multidivisional Structure

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Improving Integration in a Functional Structure by Combining Sales andMarketing

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B ildi Bl k f Diff ti ti


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Building Blocks of Differentiation

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Spans of Control

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T i l f f T i Ch M t


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Existing

Organization

HierarchyTeam Elements

Process

Action

Teams

(PATs)

Corporatecouncil

Support

Services

Directors / VPs /GMs

Managers

Workforce / staff

PAT / CFT

Typical forms of Teams in Change Management

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TOP

MIDDLE

SHOP FLOOR

Management

FACT BASE

EFFECTIVE UTILISATION OF PEOPLE POWER

Mission Strategic Planning New Products Quality systems Task Force CFT/SIT QCC Facilitation DRAM QC Circles TEIAN 5S

Total Employee Involvement

Effective

Communication is

the key

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THANK YOU

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Organizational Design & Structure

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