Unit i (b)

UNIT – I (B)

DESIGNING ORGANIZATIONAL STRUCTURES

BASIC CONCEPTS RELATED TO ORGANIZATION

The term organization is used in the following ways:

۩ Organization as Entity۩ Organization as Group of people۩ Organization as Structure۩ Organization as process

DEPARTMENTATION

The first real task in designing an organization structure is the identification of activities and group them properly.

The process of grouping activities is commonly known as Departmentation.

NEED for DEPARTMENTATION

The basic need for departmentation arises because of specialization of work and the limitation on the number of subordinates that can be directly controlled by a supervisor.

IMPORTANCE OF DEPARTMENTATION

1. Advantages of Specialization2. Fixation of Responsibility3. Development of Managers4. Facility in Appraisal5. Feeling of Autonomy

BASES OF DEPARTMENTATION

The most commonly used bases are:1. Function 2. Product3. Territory 4. Process5. Customer

FUNCTIONAL DEPARTMENTATION

Board of Directors

MANAGING DIRECTOR

PRODUCTION MARKETING FINANCE PERSONNEL

MARKET RESEARCH ADVERTISING SALES

NEWS PAPERS MAGAZINES

RADIO

TV

PRODUCT DEPARTMENTATION

Chief Executive

Car Division Truck Division Bus Division

MARKETINGPRODUCTION FINANCE PERSONNEL

TERRITORIAL DEPARTMENTATION

Head Office

EASTERN ZONE

CENTRAL ZONE

NORTHERN ZONE

SOUTHERN ZONE

WESTERN ZONE

DIVISION 1 DIVISION 2 DIVISION 3 DIVISION 4

BRANCH 1 BRANCH 2

PROCESS DEPARTMENTATION

MANAGER

(Production)

SPINNING DYEING WEAVING FINISHING

CUSTOMER DEPARTMENTATION

MANAGER

(Production)

MARKETING

MANAGER

Whole Sale Retail Hire Purchase

Export

DECENTRALIZATION

Decentralization applies to the systematic delegation of authority in an organization-wide context.

Decentralization is used to denote dispersal of physical facilities place-wise or function-wise.

FACTORS DETERMINING DEGREE OF DECENTRALIZATION

۩ Size of Organization۩ History of Organization۩ Management Philosophy۩ Availability of Managers۩ Pattern of Planning۩ Control Techniques۩ Decentralized Activities۩ Rate of change in organization۩ Environmental Influences

LINE ORGANIZATION

Line Organization structure is also known as scalar, military or vertical organization and perhaps is the oldest form.

This concept holds that in any organization or hierarchy derived from a scalar process, there must be a single head who commands it.

LINE ORGANIZATION (contd…)

Line Organization can be designed in two ways:

1. Pure Line Organization: Similar activities are performed at a particular level.

2. Departmental Line Organization: Entire activities are divided into different departments on the basis of similarity of activities.

PURE LINE ORGANIZATION

Chief ExecutiveChief Executive

FOREMAN A FOREMAN B FOREMAN C

Workers Workers Workers

DEPARTMENTAL LINE ORGANIZATION

Production Manager

Foreman (Spinning)

Foreman (Weaving)

Foreman (Dyeing)

Foreman (Finishing)

WorkersWorkersWorkers Workers

CHARACTERISTICS OF LINE ORGANIZATION

۩ Lines of authority and instructions are vertical.

۩ The unity of command is maintained in a straight and unbroken line.

۩ All persons of the same organization are independent of each other.

۩ This structure specifies responsibility and authority for all positions limiting the area of action by a particular position holder.

MERITS OF LINE ORGANIZATION

Simplicity Discipline Prompt Decision Orderly communication Easy supervision and control Economical Overall development of Managers

DE MERITS OF LINE ORGANIZATION

X Lack of SpecializationX Absence of Conceptual ThinkingX Autocratic ApproachX Problems of CoordinationX Lack of Ground work for subordinates’

Training

LINE AND STAFF ORGANIZATION

It refers to a pattern in which staff specialists advise line managers to perform their duties.

In actual practice, sometimes it is difficult to determine which departments are line or staff.

LINE AND STAFF ORGANIZATION

The problem can usually be solved by classifying activities within an organization in two ways:

1. That which is substantive (direct) in its contribution – Line activities

2. That which is objective (indirect) in its contribution – Staff activities

LINE AND STAFF ORGANIZATION

GENRAL MANAGER Public Relations Officer

Secretary

Manager (Finance) Manager (personnel)

Manager - Production Manager - Marketing

Production Engineer Production Engineer

Workers Workers

MERITS & DEMERITS OF LINE AND STAFF ORGANIZATION

MERITS: Planned Specialization Quality Decisions Prospect for Personal Growth Training Ground for Personnel

DEMERITS:X Lack of well defined AuthorityX Line and Staff conflicts

FUNCTIONAL ORGANIZATION

It is created by grouping the activities on the basis of functions required for the achievement of organizational objectives.

CHARACTERISTICS:1. Specialization by functions2. Emphasis on sub-goals3. Pyramidal growth of Organization4. Line and staff division5. Limited span of management6. Functional authority relationships among departments

FUNCTIONAL ORGANIZATION

Head Quarters

Production Marketing Finance Personnel

Plant 1 Plant 2 Plant 3

P M F P P PM MF FP P

COMMITTEE ORGANIZATION

It can be defined as a body of persons appointed to meet on an organized basis for the discussion and dealing of matters brought before it.

FEATURES:1. Group of persons2. Can deliberate only on matters that are

brought before it3. Members of the committee draw authority

through delegation.

MATRIX ORGANIZATION

Matrix Organization is the realization of two-dimensional structure which emanates directly from two dimensions of authority.

1. Pure project structure2. Functional structure

Structure :President

VP(Production)

VP(Marketing)

VP(Finance)

Project AManager

Project BManager

W

W

W

W

W

W

MATRIX ORGANIZATION STRUCTURE

VIRTUAL ORGANIZATION

Virtual Organization is a temporary network of independent companies – suppliers, customers, even erstwhile rivals – linked by information technology to share skills, costs and access to one another’s markets.

It will have neither central office nor organization chart. It will have no hierarchy, no vertical integration.

CELLULAR ORGANIZATION

It is a form of organization consisting of a collection of self-managing firms or cells held together by mutual interest. A cellular organization is built on the principles of self-organization, member ownership, and entrepreneurship.

Each cell within the organization shares common features and purposes with its sister cells but is also able to function independently.

TEAM STRUCTURE

A Team is a group of people in the organization constituted for completing certain assignments.

TYPES:1. Lead Team2. Cross-functional Team3. Problem-solving Team4. Self-managing Team

BOUNDARYLESS ORGANIZATION

It is a model that views organizations as having permeable boundaries. An organization has external boundaries that separate it from its suppliers and customers, and internal boundaries that provide demarcation to departments.

This rigidity is removed in boundaryless organizations, where the goal is to develop greater flexibility and responsiveness to change and to facilitate the free exchange of information and ideas.

BOUNDARYLESS ORGANIZATION

The concept was developed at General Electric and described in the book The Boundaryless Organization: Breaking the Chains of Organizational Structure by Ron Ashkenas and others, which was published in 1995.

FLAT ORGANIZATION

Flat structure is that which reduces the levels of management, widens span of control of managers at various levels of the organization, and is often more decentralized with regard to decision making autonomy.