2. Meaning Org design is concerned with making decisions
aboutthe forms of coordination, control and motivation thatbest fit
the enterprise. In making these decisions it is necessary to
considerexternal factors and internal factors of the enterprise. It
is intimately concerned with the way in whichdecision making is
centralised, shared or delegatedand with the way the enterprise is
governed. 3. Characteristics of org design Functionally efficient
Economically viable User friendly Environmentally aligned
Aesthetically appealing mutual respect & trust Growth promoting
Change responsive 4. Management FunctionsDesigning organizational
structures is part of organizing, one of thefour basic management
functions.PlanningOrganizing Leading ControllingLead toDefining
DeterminingDirectingMonitoringAchieving thegoals, estab-what needs
and moti-activitiesorganizationslishingto be done,vating all to
ensure statedstrategy, andhow it willinvolved that they
arepurposedeveloping be done, parties andaccomplishedsubplans toand
who is resolvingas plannedcoordinate to do it conflictsactivities
5. Determinants of org design Environment Objectives or Mission
Strategy Technology People & culture Age Size 6. Components of
org design Centralisation Complexity Formalisation Structure
Division of labour Standardisation Differentiation
Departmentalization Span of control 7. Formalization - the degree
Centralization - the degree to which the organizationto which
decisions are has official rules,made at the top of the regulations
and proceduresorganizationHierarchy of Specialization - Authority
-the degree tothe degree of Basic which jobs arevertical
narrowlydifferentiationDesigndefined andacrossdepend on levels of
Dimensions uniquemanagement expertise Complexity - the degree to
Standardization - the which many different typesdegree to which
workof activities occur in theactivities are
accomplishedorganization in a routine fashion 8. Key Design
Questions and Answers for Designing ProperOrganization Structure 9.
Centralisation One of the important building blocks of org design
isthe level of Centralistion or Decentralisation indecision making.
Centralisation refers to the degree to which formalauthority for
making discretionary choices isconcentrated in an individual, unit
or level allowingemployees to work with minimal inputs. In simple
words, it refers to the extent to whichdecision making lies at a
single point in the org. 10. The hierarchical structure with
centralised authority atthe top is based on command & control.
Top of the pyramid has the right to give command andthe
subordinates have the duty to obey & follow.
Decentralisation:It is the process of dispersing decision making
closer to people in the organisation.Decentralization is the policy
of delegating decision- making authority down to the lower levels
in an organization.A decentralized organization shows fewer tiers
in the organizational structure, wider span of control, and a
bottom-to-top flow of decision-making and flow of ideas. 11.
Centralisation vs. Decentralisation-Advantages
DecentralisationCentralistion 1. Greater flexibility1. Uniformity
of policies, stds & actions. 2. Quick response to
localrequirements.2. Closer control 3. Top mgt focus on policy3.
Maxi eco of scaleissues4. Eliminates duplication 4. Intra unit5.
Reduces risk in DM bycommunication less skilled subordinates 5. On
the job training. 6. Morale & commitment 7. Healthy
competitionamong units 12. Disadvantages Centralisation
Decentralisation1. Much decision load on 1. Problems of control top
mgt.2. Conflicts of goals &2. Lack of initiative frominterests
among units top mgt 3. Loss of economies of3. No quick response to
scale local requirements. 4. Duplication of efforts 13. Both has
benefits and troubles to the organization.Manager has to bring a
correct balance betweenthese two for effective decision
making.Balance should be made in terms of long termstrategy making
and short term flexibility andinnovation.As top mgt can concentrate
on the former, middleand lower managers can respond to quick
changes inthe environment and be more flexible.Thus, leads to
bringing a balance betweencentralisation and decentralisation. 14.
Complexity Refers to degree of differentiation that exists within
anorganisation. It focuses on number of specific jobs,
roles,hierarchical levels etc in an org. Complexity exists due to
the grouping of the tasks. It requires more process of managing
control,coordination and communication with all the sectionsof task
group. Organisations can be complex in 3 ways: 15. 3 ways of org
complexity Horizontal :Refers to the degree of differentiation
between the units in terms of nature of work, requirements of
skills and knowledge, employees orientation etcIt can be seen in
division of labour, departmentation and functional specialisation.
Vertical :Refers to the number of hierarchical levels which exist
between top and lowest level operators in the org.Increase in
vertical complexity leads to increase in horizontal also.Number of
these levels can be determined by Span of Control. 16. Spatial
complexity Refers to the degree to which the subunits &
personnelof an org are geographically separated. Additional units
in different locations createadditional requirements for control
and coordination. Eg: FMCG co, have their marketing divisions
spreadacross the country but production is done in one place.
Technology help such org to overcome the problem ofcontrol and
coordination. 17. Formalisation Refers to the degree to which jobs
in an org arestandardised. Greater formalisation reduces the
employeesdiscretion in dealing with their work. Formalisation
exists in the form of detailed rules,meticulous work procedures
& clear job descriptions. By this org ensure that any input is
handled in a stdmanner to produce a uniform output. But less stdzn
mean less programmed jobs & providediscretion to employees for
work. 18. It benefits the org in following manner Reduces
variability of outputs. It is the best way of dealing with
complexity Reduces the need for direct supervision and control.
Reduces the chances of committing mistakes at work. Jobs can be
handled by less experienced individualsalso. 19. Formalisation
techniques Selection & recruitment Role or Job description
Rules & procedures Training Culture & Organisational
socialisation 20. Implication of high formalisationFactors High
formal Low formalNature of taskRoutine Non routineNature of product
MassCustomisedOutput predictability HighLowCause effect reln
HighLowMgt philosophyControl & command Consensus
&commitmentHierarchical levelLow HighFunctional
deptsProductionMarketing / sales 21. Structure Refers to the way
various tasks, activities & roles aregrouped together and
relate with each other. It provides the basic framework for
organisation towork. It establishes the relationship between
variouscomponents of org & provides coordination
andcommunication, decision making and controlmechanisms. Based on
the need of the org, structure can bedesigned. 22. Types of org
structure Broadly speaking, there are two types of org
structures.They are Mechanistic model Organic model 23. Mechanistic
Vs Organic Models 24. Features of Mechanistic structure High
specialisation Rigid departmentalisation Clear chain of command
Narrow spans of control Centralisation High formalisation 25.
Features of organic structures Broad specialisation Multi level,
cross functional teams Multi channel command Wide span of control
Decentralisation Low formalisation 26. MechanisticOrganic
BoundarylessRigid hierarchical Collaboration (both
verticalCollaboration (vertical,relationshipsand horizontal)
horizontal, customers, suppliers, competitors)High formalization
Low formalization Low formalizationTop-down communication Informal
communicationInformal communicationCentralized decision
Decentralized decisionDecentralized decisionauthorityauthority
authorityNarrowly defined specialized Broadly defined flexible jobs
Broadly defined flexible jobsjobsEmphasis on individualsEmphasis on
teams Emphasis on teams that alsoworking independentlymay cross
organization boundaries 27. Boundaryless Organization 28. Virtual
Organization 29. Division of labour When total tasks are divided
into smaller and simplifiedunits for the purpose of assigning
responsibilities toperform the job is called as Division of Labour.
As org become more complex, breaking the work intovarious tasks
become the norm. Also called as specialistion, refers to the
distribution offormal duties among a number of positions.
Specialisation can be of two types:1. Functional2. Role 30.
Division of labor: Makes efficient use ofemployee skills Increases
employee skillsthrough repetition Less between-jobdowntime
increasesproductivity Specialized training is moreefficient Allows
use of specializedequipment 31. AdvantagesDisadvantages High
efficiency Routine tasks leading to Low skill requirement monotony
Less time and cost in High cost of supervisiontraining Full
potential not utilised High standardisation Low job satisfaction
Uniform output Lack of identification withtotal problems No new
challenges Increased need forcoordination and control 32. Refers to
the extent to which jobs & procedures areprecisely &
clearly defined. rules apply invariably.Jobs requiring adoption of
different procedurescannot be standardised.It can applied to tasks
that are routine, problems thatcan be analysed and decision can be
programmed.Balancing the need for standardisation is complextask
for a manager.Discovering new ways of doing job needs
mutualadjustment but not standardisation is the slogan oftodays
orgs. 33. Differentiation Horizontal differentiation often refers
to the process ofdepartmentalistion. Vertical differentiation
refers to the levels in thestructure of an org. Increased
differentiation leads to greater complexity. It also leads to
distortion of communication, delay indecision making and increased
time lag for finishingthe tasks. 34. DepartmentalizationWhat is it?
The process of grouping jobs according to some
logicalarrangement.Functional Departmentalization: Grouping jobs
involving the same or similar activities.Product
Departmentalization: Grouping activitiesaround products orproduct
groups. 35. Ways to Departmentalisation By function: arranging the
business according to what each section or department does By
product or activity: organising according to the different products
made By area: geographical or regional structure By customer: where
different customer groups have different needs By process &
market: where products have to go through stages as they are made
36. Functional structure This depends on the business type, size
andstructure used Lets look at a Chief ExecutiveBoard of Directors
Production Marketing Accounts Personnel IT 37. Functional Structure
AdvantagesDisadvantages Specialisation each Closed communication
department focuses on could lead to lack its own workof focus
Accountability Departments can become resistant someone is
responsible to change for the section Coordination Clarity know
your and may take too long others roles Gap between top and bottom
38. Product Based 39. Organisation by Product/ActivityAdvantages
Disadvantages Clear focus on market Duplication of functionssegment
helps meet (e.g. different sales forcecustomers needs for each
division) Positive competition Negative effects ofbetween divisions
competition Better control as eachdivision can act as Lack of
central controlseparate profit centre over each separate division
40. Hewlett-Packards Headquarters WorldwideHewlett PackardAmericas
Europe, Middle East, Africa Asia PacificHouston, Texas Geneva,
SwitzerlandHong Kong 41. PRESIDENT
MANUFAC-MARKETINGRESEARCHFINANCEPLANNING PERSONNEL TURINGLINE
MANAGEMENTVICE-PRESIDENTVICE-PRESIDENTVICE-PRESIDENTDOMESTICDOMESTICINTERNATIONALDIVISION
ADIVISION CDIVISION VICE-PRESIDENTVICE-PRESIDENT DOMESTICDOMESTIC
DIVISION BDIVISION DASIA/PACIFICEUROPE/MIDDLE LATIN AMERICA
STAFFEAST/AFRICACOUNTRY COUNTRY
COUNTRYSUBSIDIARIESSUBSIDIARIESSUBSIDIARIES 42. Organisation by
AreaAdvantages Disadvantages Serve local needs better Conflict
between local and Positive competition central management More
effective Duplication of resourcescommunication betweenand
functionsfirm and local customers 43. PRESIDENTCORPORATE
STAFFMANUFAC-MARKETING RESEARCH FINANCEPLANNINGPERSONNELTURING LINE
MANAGEMENTAREA MANAGERAREA MANAGERNORTH AMERICA EUROPEAREA
MANAGERAREA MANAGERAREA MANAGERFAR EASTLATIN AMERICA
MIDDLEEAST/AFRICAExecutives with total corporate and worldwide
responsibilities. Corporate staff activities on a worldwide basis
generally involvepolicy matters, strategic planning, basic product
planning, functional guidance to line geographic unit, and
coordination ofactivities between geographic unitsExecutives with
line responsibility for all operations in a particular geographic
area 44. Matrix Organization 45. Advantages and Disadvantages of
the Matrix Approach: Advantages Disadvantages Efficient utilization
of scarce, Employee frustration andexpensive specialistsconfusion
as a result of the dual Flexibility that allows newchain of
commandprojects to start quickly Conflict between product and
Development of cross-functionalfunctional managers overskills by
employeesdeadlines and priorities Increased employee involvement
Too much time spent in meetingsin management decisionsto coordinate
decisionsaffecting project or productassignments 46. Establishing
ReportingRelationships Span of control What needs to be clarified?
Chain of Command: Clear and distinct lines of authority among all
positions in an organization. Span of Management: What is it? The
number of people who report to each manager. 47. Tall Versus Flat
Organizations What is the difference? Flat organizationalstructure
leads to higherlevels of employee moraleand productivity. Tall
organizationalstructures usually tend tobe more expensiverequiring
more managers. 48. Tall Versus Flat Organizations 49. Factors
Influencing the Span ofManagement Competence of supervisor and
subordinates. Dispersion of subordinates. Extent of non-supervisory
work. Degree of required supervision. Extent of standard
procedures. Similarity of tasks. Frequency of new problems.
Preferences of supervision. 50. Flexibility Design should be
flexible enough to allow foradaptation to changing demands of the
environment. Design based on narrow specialistion placesconstraints
on the flexibility in redeployment of HR. Structure shd encourage
innovation throrearrangement of org resources. Structure shd change
in response to environment andthe needs of the org as orgs cannot
be static andconstant.
