Restructuring And Downsizing in OD

Presented By: Venkatesh.L.Nadar (07bs4787) N.Rakesh (07bs2382)

Contingencies Influencing Structural Design
Environment Organization Size Worldwide Operations

Structural Design


Organization Goals

Functional Organization

The Functional Form
Advantages Disadvantages
 Promotes skill • Emphasizes routine specialization tasks; encourages  Reduces duplication of short time horizons scarce resources and uses resources full time • Fosters parochial  Enhances career perspectives by development for specialists within large managers and limits departments capacity for top Facilitates communication management and performance because positions superiors share expertise with their subordinates • Multiplies  Exposes specialists to interdepartmental others within same specialty dependencies;

increases coordination and

The Divisional Organization

The Divisional Form
Recognizes interdepartmental interdependencies Fosters an orientation toward overall outcomes and clients Allows diversification and expansion of skills/training Ensures accountability by departmental managers and promotes delegation Heightens departmental cohesion and involvement in work

• May use skills and resource inefficiently • Limits career advancement by specialists • Impedes specialists’ exposure to others within same specialties • Puts multiple-role demands upon people and creates stress • May promote departmental

The Matrix Organization

The Matrix Structure

• Can be difficult to implement • Increases role ambiguity, stress, and anxiety • Performance is lowered without power balancing between projects and functions • Makes inconsistent demands and can promote conflict and short-term crisis orientation • May reward political

 

Makes specialized, functional knowledge available to all projects Use people flexibly Maintains consistency by forcing communication between managers Recognizes and provides mechanisms for dealing with legitimate, multiple sources of power Can adapt to environmental changes

The Process-Based Structure

Characteristics of Process-Based Structures
• • • • • • •

Processes drive structure Work adds value Teams are fundamental Customers define performance Teams are rewarded for performance Teams are tightly linked to suppliers and customers Team members are well informed and trained

The Process-Based Form Advantages
Focuses resources on customer satisfaction Improves speed and efficiency Adapts to environmental change rapidly Reduces boundaries between departments Increases ability to see total work flow Enhances employee involvement Lowers costs dues to overhead

• Can threaten middle managers and staff specialists • Requires changes in command-andcontrol mindsets • Duplicates scarce resources • Requires new skills and knowledge to manage lateral relationships and teams • May take longer to make decisions in

The Network Organization
Designer Organizations Broker Organization Producer Organizations

Supplier Organizations

Distributor Organizations

The Network-Based Form
 

• Difficulty managing lateral relationships across autonomous organizations • Difficulty motivating members to relinquish autonomy to join network • Sustaining membership and benefits can be problematic • May give partners access to proprietary

 

Enables highly flexible and adaptive responses Creates a “best of the best” firm to focus resources on customer and market needs Each organization can leverage a distinctive competency Permits rapid global response Can produce “synergistic” results

DOWNSIZIN It is a set of G
activities undertaken on part of the management and designed to improve organizational

Downsizing Tactics

Why Downsize
Declining Profits Business downturn or increased pressure from competitors Mergers and acquisitions Introduction to new technologies Reduce operating costs Decrease levels of management Getting rid of employee “Deadwood”

Clarify the organization’s strategy  Assess downsizing options and making relevant choices  Implement the changes  Address the needs of survivors and those who leave  Follow through with growth plans

Reactions • Negative Attitudes and behaviors • Reduced performance capabilities • Lower organizational Productivity • Anger • Anxiety • Resentment


Delta Airlines – A CASE STUDY
3rd largest US airline  Industry pushed over the edge post 9/11  Major US carriers cut costs by $14B  Over 70,000 or 16% of workforce was laid off  267 aircrafts were grounded


Downsizing efforts at Delta
Direct dealing between employees and management  HR dept was outsourced  A Core team was setup led by the CLO  A war room was setup  Build a workforce reduction program to manage crisis  DWP – a set of 3 programs

Enhanced early retirement Leave of absence Severance

Employees provided with 6 voluntary programs – 15 yr leave programs  Added flight privileges, pension credit time and ability to bid for their jobs while on leave  Intended to keep connectivity of employees  Involuntary severance program also created  98% of employee reduction created through voluntary leave program  Open to apply to other positions

Change Management
Tools were developed to assist managers to evaluate their process, job designs and organization structures  Identify and implement changes in management with reduced staff levels  Training programs  New ‘LEADER - LED’ communication strategy  HR being viewed as a support area  Websites


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