Organizational Structure Design(1)

8/13/2019 Organizational Structure Design(1)

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ORGANIZATIONAL

STRUCTURE & DESIGN

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What is an Organisational Structure The organisational structure defines theorganisations hierarchy of people and

departments as well as how information flows

within the organization.

The organisational structure determines how

and when information is distributed as well as

who makes what decisions based on theinformation available.

How job tasks are formally divided, grouped

and coordinated.Wednesday, January 15,2014

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The importance of the Organizational

Structure The Organisational Structure is important

because it ensures that there is an efficient

operation of a business and it clearly definesits workers and their functions.

The organisational structure also helps define

the hierarchy and the chain of command.

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The Concept of Organisation Structure Structure helps influence behaviour and

relationships of jobs and functions

Structure defines recurring activities andprocesses.

Structure provides a purposeful and goal-

oriented behaviour.



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The Designing the Process cont1. Develop a clear mission statement for the

organization. Focus the organisation structure

around the mission statement.2. The mission statement should include the

inter-relationship between workers at every

level as well as inspiring innovation andensuring efficiency.



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The Designing the Process cont

3. Decide whether the organisation structure will

be centralized and formal or decentralized

and informal. For centralized and formal

organisations, the organisation structure takes

more of a top-down approach with strictly

defined work roles.

For decentralized and informal organizations,

there is more of a cooperative approach with

workers often performing a wide range of

functions.Wednesday, January 15,2014 6


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The Designing Process cont4. The organisation structure can be department

based or based on a particular project or process.

Department -based organization structure isoften divided into line functions (such as

manufacturing) and staff functions (such as

human resources).



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The Designing Process cont5. Design the overall chain of command for the

organisation. If there is a single overall

director or leader, determine the title for thatrole. If there are dual or multiple leaders,

divide the overall company function between

the various roles in a way that there is a clear

unity of command.



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The Designing Process cont7. Add subordinate roles to the chain of

command. Determine the process of reporting

from subordinate to supervisor and makeallowances for special circumstances (such as

an emergency). Indicate if and how

interactions across departments or projects

will take place.



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Designing the Process8. Determine the authority and responsibility to

be assigned to each position in the

organization structure. Attempt to achieve aminimum of overlapping functions. Also,

attempt to minimize any possible confusion

by subordinates concerning which supervisors

to consult with on specific issues.



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The effects of structure on individual

and group

The structure of any organisation will affect the

following:-

1. Behaviour of how people act and work2. Motivation of workers

3. Performance

4. Teamwork and cooperation

5. Intergroup and interdepartmental

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TYPES OF STRUCTURES

I. Functional structurethis kind of

organisational structure classifies people

according to the function they perform in theorganization. The organisation chart for a

functional based organisation consists of:

Vice President, Sales department, Customer

Service Department, Engineering or

production department, Accounting

department and Administrative department.Wednesday, January 15,2014 12


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FUNCTIONAL STRUCTURE cont.

Product structurea product structure is

based on organizing employees and work on

the basis of the different types of products. Ifthe company produces three different types of

products, they will have three different

divisions for these products.



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315

Functional Organizations

FIGURE 3.1Wednesday, January 15,2014


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Functional Organization of Projects

Advantages

1. No Structural Change

2. Flexibility

3. In-Depth Expertise

4. Easy Post-Project

Transition

Disadvantages

1. Lack of Focus

2. Poor Integration

3. Slow

4. Lack of Ownership


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317

Project Management Structures

(contd)

Organizing Projects: Dedicated Teams

Teams operate as separate units under the

leadership of a full-time project manager.

In a projectizedorganization where projects are

the dominant form of business, functional

departments are responsible for providing supportfor its teams.


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Dedicated Project Team



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Project Organization: Dedicated

Team

Advantages

1. Simple

2. Fast

3. Cohesive

4. Cross-Functional

Integration

Disadvantages

1. Expensive

2. Internal Strife

3. Limited Technological

Expertise

4. Difficult Post-Project

Transition


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320

Projectized Organizational Structure



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Different Matrix Forms

Weak Form

The authority of the functional manager

predominates and the project manager hasindirect authority.

Balanced Form

The project manager sets the overall plan and the

functional manager determines how work to be

done.

Strong Form

The project manager has broader control andWednesday, January 15,

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Choosing the Appropriate Project

Management Structure

Organization (Form) Considerations

How important is the project to the firms

success?

What percentage of core work involves projects?

What level of resources (human and physical)

are available?


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TYPES OF ORGNAZATIONAL

STRUCTURES cont

II. Line Structure: This has a very specific

line of command. The approvals and orders in

this kind of structure come from top to bottom ina line. Hence the name line structure. This kind

of structure is suitable for smaller organizations.

This is the sort of structure allows for easy

decision making, and is very informal in nature.

They have fewer departments, which makes the

entire organization a very decentralized one.Wednesday, January 15,

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Types cont..

III. Line and Staff Structure: Line and

structure combines the line structure where

information and approvals come from top tobottom, with staff departments for support and

specialization. Line and staff organizational

structures are more centralized. Managers of

line and staff have authority over their

subordinates, but staff managers have no

authority over line managers and their

subordinates.Wednesday, January 15,

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LINE & STAFF STRUCTURE cont.

The decision making process becomes slower

in this type of organizational structure

because of the layers and guidelines that aretypical to it, and the formality involved.


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Matrix Organizational Structure

The matrix organizational structureis one in which functional and staff

personnel are assigned to both a basic

functional area and to a project orproduct manager

The matrix form is intended to make

the best use of talented people withina firm by combining the advantages of

functional specialization and product-

project specializationWednesday, January 15,

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Matrix Organizational Structure


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IV MARKET STRUCTURE

Market Structuremarket structure is used to

group employees on the basis of specific

market the company sells in a company couldhave three different markets they use and

according to this structure, each would be a

separate division in the structure.


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Informal Organisation exists within the formal organisation. An

informal organisation is a network of personal and social relationships.

People working in a formal organisation meet and interact regularly.

They work, travel, and eat together. Therefore, they become good

friends and companions. There are many groups of friends in a formalorganisation. These groups are called informal organisation.

An informal organisation does not have its own rules and regulation. It

has no system of co-ordination and authority. It doesn't have any

superior-subordinate relationship nor any specific and well-defined

objectives. Here in informal organisation, communication is donethrough the grapevine.

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V GEOGRAPHIC STRUCTURE

Geographic structurelarge organizations

have offices at different place, for example

there could be a north zone, south zone, westand east zone. The organizational structure

would then follow a zonal region structure.


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VI. MATRIX STRUCTURES

Matrix Structures

This is a structure, which has a combination

of function and product structures. Thiscombines both the best of both worlds to

make an efficient organizational structure.

This structure is the most complex

organizational structure.


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Components of Organizational

Structure

Organizational Design

Management decisions and actions that result in aspecific organization structure and work

specification including:-1. Work Specification: Specify to what degree the

tasks are subdivided into separate jobs

2. Departmentalization: The basis in which jobs willbe grouped together

3. Chain of Command:To whom do individuals andgroups report to.


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Organizational Structure cont..

4. Span of Control: The number of people that

a can a manager efficiently and effectively

direct.5. Centralization and Decentralization: Where

is the decision making authority?

6. Formalization:To what degree will there berules and regulations to direct employees and

managers?


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Division of Labour/specialization

This is a process of identifying the specific

jobs that need to be done and designing the

people who will perform them. Jobspecialization can occur in 3 different ways:

1. Personal Specialties: occupational and

professional specialties e.g. accountants,engineers, scientists.


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Division of Labour cont..

2. Horizontal Specialties: work is divided by

the natural sequence order e.g.

manufacturing plants divide work intofabricating and assembly.

3. Vertical Specialties:Work is divided along

the vertical plane of an organization from the

lowest level manager to the highest level

manager.


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Delegation of Authority

Process of distributing authority downward in an

organisation. Whether an organisation chooses to

centralize or decentralize will be guided by:

1. How routine and straightforward are the jobs

required decisions?

2. Are individuals competent to make decisions?

3. Are individuals motivated to make the decisions?


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Delegation of Authority cont..

Reasons to Decentralize Authority:-

It encourages the development of professional

managers. Managers are able to exercise more autonomy

but it can lead to a competitive climate.


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Delegation of Authority cont

Reasons to Centralize Authority:-

1. When the managers are not skilled enoughand would need further training which can beexpensive.

2. When there are new administrative costsbecause new divisions need to be formed.

3. Decentralization can mean duplication offunctions.


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Departmental Bases

The process of grouping jobs into logicalunits.

The process in which an organization isstructurally divided by combining jobs indepartments according to some sharedcharacteristics.

1. Functional Departmentalization2. Geographical

3. ProductWednesday, January 15,

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SPAN OF CONTROL

This is the number of individuals who report

to a specific manager.

Three factors are important in determiningoptimum span of control:-

Required Contact

Degree of Specialization Ability to communicate

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Organizational Structure Design(1)

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