ORGANISATION STRUCTURE AND DESIGN LECTURE 5

Lecturer: Sara Aslam Fall 2011 Kinnaird College for Women

COMPONENTS OF ORGANIZATION STRUCTURE

THE NATURE

OF

ORGANIZING

Organization Design

The overall set of structural elements and the relationships among those elements used to manage the total organization. A means to implement strategies and plans to achieve organizational goals. The degree to which the overall task of the organization is broken down and divided into smaller component parts.

Job Specialization

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JOB SPECIALIZATION

Benefits of Specialization

Workers can become proficient at a task. Specialized equipment can be more easily developed. Employee replacement becomes easier. Employee boredom and dissatisfaction with mundane tasks. Anticipated benefits of specialization do not always occur.

Limitations of Specialization

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ALTERNATIVES TO SPECIALIZATION

Job Rotation

Systematically moving employees from one job to another. Most frequent use today is as a training device for skills and flexibility. An increase in the total number of tasks workers perform.

Job Enlargement

Increases training costs, unions contend that workers deserve more pay for doing more tasks, and the work may still be dull and routine.

Job Enrichment

Increasing both the number of tasks the worker does and the control the worker has over the job.

Principles of Management Instructor: Sara Aslam

GROUPING JOBS: DEPARTMENTALIZATION

Departmentalization

The process of grouping jobs according to some logical arrangement.

Rationale for Departmentalization

Organizational growth exceeds the owner-managers capacity to personally supervise all of the organization. Additional managers are employed and assigned specific employees to supervise.

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COMMON BASES OF DEPARTMENTALIZATION

TYPES OF DEPARTMENTALIZATION

Functional Departmentalization
- The grouping of jobs involving the same or similar activities.

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PRODUCT DEPARTMENTALIZATION

Product Departmentalization

The grouping of activities around products or product groups. All activities associated with one product can be integrated and coordinated. Speed and effectiveness of decision making are enhanced.

Advantages

Disadvantages

Managers may focus on their product to the exclusion of the rest of the organization

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CUSTOMER DEPARTMENTALIZATION

Customer Departmentalization

Grouping activities to respond to and interact with specific customers and customer groups.

Advantage

Skilled specialists can deal with unique customers or customer groups.

A large administrative staff is needed to integrate activities of various departments.
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Disadvantage

Principles of Management Instructor: Sara Aslam

LOCATION DEPARTMENTALIZATION

Location Departmentalization

The grouping of jobs on the basis of defined geographic sites or areas.

Advantage

Enables the organization to respond easily to unique customer and environmental characteristics.
Large administrative staff may be needed to keep track of units in scattered locations.

Disadvantage

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Principles of Management Instructor: Sara Aslam

TALL VERSUS FLAT ORGANIZATIONS

Tall Organization
President

Flat Organization

President

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TALL VERSUS FLAT ORGANIZATIONS

Tall Organizations
Are more expensive because of the number of managers involved. Foster more communication problems because of the number of people through whom information must pass.

Flat Organizations
Lead to higher levels of employee morale and productivity. Create more administrative responsibility for the relatively few managers. Create more supervisory responsibility for managers due to wider spans of control.

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Principles of Management Instructor: Sara Aslam

DISTRIBUTING AUTHORITY

Authority

Power that has been legitimized by the organization. The process by which managers assign a portion of their total workload to others. To enable the manager to get more work done by utilizing the skills and talents of subordinates. To foster the development of subordinates by having them participate in decision making and problem solving that allows them to learn about overall operations and improve their managerial skills. (increased participation)

Delegation

Reasons for Delegation

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Principles of Management Instructor: Sara Aslam

DECENTRALIZATION AND CENTRALIZATION

Decentralization

The process of systematically delegating power and authority throughout the organization to middle- and lowerlevel managers.

Centralization

The process of systematically retaining power and authority in the hands of higher-level managers.

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FACTORS DETERMINING THE CHOICE OF CENTRALIZATION

Factors Determining the Choice of Centralization

The complexity and uncertainty of the external environment. The history of the organization. The nature (cost and risk) of the decisions to be made.

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COORDINATING ACTIVITIES

Coordination

The process of linking the activities of the various departments of the organization.

The Need for Coordination

Departments and work groups are interdependent; the greater the interdependence, the greater the need for coordination.

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EMERGING ISSUES IN ORGANIZATION DESIGN

The Learning Organization

An organization that works to facilitate the lifelong learning and development of its employees while transforming itself to respond to changing demands and needs.

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Thank You

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