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 (soumyaasrikrishna@Hotmail.com)