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ORGANIZATION STRUCTURES

Its all about


working together

ORGANIZATION STRUCTURES

Organizing As A Management Responsibility


Organizing is one of the
management functions.
It involves determining how
activities
and resources are to be
grouped.

ORGANIZATION STRUCTURES
Roles and Importance

What You Can Learn from an Organization


Chart
Division of work - Positions and titles show work responsibilities.
Supervisory relationships - Lines between positions show who reports to whom in
the chain of command.
Span of control - The number of persons reporting to a supervisor.
Communication channels - Lines between positions show routes for formal
communication flows.
Major subunits - Which job titles are grouped together in work units,
departments, or divisions.
Staff positions - Staff specialists that support other positions and parts of the
organization.
Levels of management - The number of management layers from top to bottom
.
( Chain of Command is Scalar Principles meaning unbroken line of authority
from top to bottom. * Unity of Command One and only one boss.
Delegation of Authority Proper authority should be delegated to all levels of
Management )

ORGANIZATION STRUCTURES

Organizing As A Management Responsibility


Organizing
process of arranging people and resources to work
toward a common goal.

Formal Structure
The official structure of the organization

Informal Structure
the unofficial relationships that develop
among an organizations members.

ORGANIZATION STRUCTURES
FormalStructures

Structure
system of tasks, reporting relationships, and communication that links
people and positions within an organization.

Organization Charts
describe the formal structure, how an organization should ideally work.

ORGANIZATION STRUCTURES
Informal Structures

Informal
Organization ,
Sports Group

Morning Coffee
regulars

Major Concerns in Organizing


Division of Labor (Differentiation)
Coordination (Integration)

In Reference to the Organizational


Chart, Organizing Involves:
VERTICAL STRUCTURE or Flat Org. Chart
Coordination from Top to Bottom
HORIZONTAL STRUCTURE or Tall Org Chart
Departmentalization (Who works together?)

Tall
Tall and
and Flat
Flat Organizations
Organizations
Tall structures have many levels of authority
and narrow spans of control.
As hierarchy levels increase, communication
gets difficult, creating delays in the time
being taken to implement decisions.
Communications can also become garbled as
it is repeated through the firm.

Flat structures have fewer levels and wide


spans of control.
Structure results in quick communications
but can lead to overworked managers.
Copyright 2004 McGraw-Hill. All rights reserved.

712

Flat
Flat Organizations
Organizations

Copyright 2004 McGraw-Hill. All rights reserved.

Figure 7.8a

713

Tall
Tall Organizations
Organizations

Copyright 2004 McGraw-Hill. All rights reserved.

Figure 7.8b

714

Structuring an organization for


Organization design and process
involves decision about five key
elements as :
Work Specialization
Chain of Command
Span of Control
Authority
Departmentalization

Work Specialization
Degree to which tasks are subdivided into individual jobs
A highly specialized job is narrow in scope
Increases efficiency up to a point
With extreme specialization, workers tend to become
bored and alienated

Chain of Command
The line of authority, shown in
the organization chart, that
links all persons and shows who
reports to whom.
CEO

VP Marketing

VP Production

VP Finance

Authority
Managers have authority because of the
positions they hold (not who they are)
To be effective, it must be accepted by
subordinates.

Responsibility
Duty to perform the task an employee
has been assigned
Authority should be commensurate with
responsibility.

Span of Management
Number of employees reporting
to a supervisor
Tradition has recommended a
span of management of four to
seven subordinates
What is best depends on the
situation

Basic Departmentation

EXHIBIT 11.4

Changing Organizational Structures and


Increasing Complexity as Firms Grow

Organizing process

122

/ Equipment

Time
Number

Departmentalization
Basis for grouping job positions into departments
and departments into the total organization.
Internal Operations Oriented
Functional
Network (Virtual)

Output Oriented
Divisional
Product
Geographic
Customer

Team (Cluster)

Combinations
Hybrid (different types at different places in
an org.)
Matrix (different types at simultaneous at
the same places in an org.)

http://www.bized.co.uk

Ways to Structure a Business

Copyright 2006 Biz/ed

Departmentation by Functional
Departmentalization
Grouping together people and jobs into one unit

Functional Structures
group together people using similar skills to perform similar activities.
Potential Advantages of Functional Structures
Economies of scale make efficient use of human resources.
Functional experts are good at solving technical problems.
Training within functions promotes skill development.
Career paths are available within each function.
Disadvantages
Difficult for departments to communicate with others.
Preoccupation with own department and losing sight of
organizational goals.

Functional Approach

Departments based on similar activities,


skills and resource use.

Advantages:

Disadvantages:

Efficient use of
resources
Economies of
Scale
In-depth skill
specialization

Poor communication
among departments
Slow response to
external changes
Loyalty more to
function than
customer or the
whole organization

The
The
Function
Function
al
al
Structur
Structur
eeof
ofPier
Pier
11
Imports
Imports

Figure 7.3
Copyright 2004 McGraw-Hill. All rights reserved.

728

ORGANIZATION STRUCTURES

Functional Structures

Functional Chimneys Problem


A lack of communication and coordination
across functional organizations

Departmentation
Departmentation by
by Product
Product or
or
Services
Services
Product Structure
Customers are served by self-contained
divisions that handle a specific type of
product or service.
Allows functional managers to specialize in one
product area.
Division managers become experts in their area.
Removes need for direct supervision of division by
corporate managers.
Divisional management improves the use of
resources.

Copyright 2004 McGraw-Hill. All rights reserved.

731

Viacoms
Viacoms
2001
2001
Product
Product
Structure
Structure

Copyright 2004 McGraw-Hill. All rights reserved.

Figure 7.5

732

Product,
Product,
Market,
Market,
and
and
Geographi
Geographi
cc
Structures
Structures

Figure 7.4
Copyright 2004 McGraw-Hill. All rights reserved.

733

Departmentation
Departmentation by
by Territory
Territory
Geographic Structure
Each regional or a country or area with
customers with differing needs is served by a
local self-contained division producing
products that best meet those needs.
Global geographic structure
Different divisions serve each world region when
managers find different problems or demands across
the globe.
Generally, this structure is adopted when managers
are pursuing a multidomestic strategy.

Copyright 2004 McGraw-Hill. All rights reserved.

734

Product,
Product,
Market,
Market,
and
and
Geographi
Geographi
cc
Structures
Structures

Figure 7.4
Copyright 2004 McGraw-Hill. All rights reserved.

735

Departmentation
Departmentation by
by Customer
Customer or
or
Market
Market
Market (Customer) Structure
Groups together people and jobs that serve
the same customers or clients
Global market (customer) structure
Customers in different regions buy similar products so
firms can locate manufacturing facilities and product
distribution networks where they decide is best.
Firms pursuing a global strategy will use this type of
structure.

Copyright 2004 McGraw-Hill. All rights reserved.

736

Product,
Product,
Market,
Market,
and
and
Geographi
Geographi
cc
Structures
Structures

Figure 7.4
Copyright 2004 McGraw-Hill. All rights reserved.

737

Departmentation by Process or
Equipment
- Separated based on their role in a production process.
Best example of process departmentalization can be seen
in a textile mill where we may have a spinning department,
weaving department, dyeing department, printing
department, etc.

Cartridge

Printers

Color Fillers

Time departmentalization
In time departmentalization, departments are separated based on the
division of their working time or job shifts.
For an example, departments can be made based on night shift, morning or
regular shift, evening shift, etc.

Number departmentalization
In number departmentalization, separate departments are made after
analyzing and judging the maximum limit up to which number of persons can
be managed or educated or supervised or taken care of.
For example, students having numbers from 1 to 50 are made to sit in A
division of their class and so on. Military forces also use this method.
Departmentalization by numbers is depicted in the image given below.
number departmentalization.

Forms of Organization Structures


1.
2.
3.
4.
5.
6.

Line Organization
Line and Staff Organization
Functional Organization
Project Organization
Matrix Organization
Committee Organization

Line organization
- Simplest and oldest type of Organization
- Also known as Military organization and was used first by Roman army.
- Lines of authority flows from top to bottom in more less straight line,
so it gives the name Line Organization

Types of Line Organization


1. Pure line organization
- the activities at any one
level are the same and all
individuals perform the
same type of work.
2. Departmental Line
organization - the firm is
broadly divided into
departments

Merits of Line Organization


Simplest-Unity of Command (scalar chain ).
Better discipline-Fixed responsibility- Flexibility- Prompt decision

Demerits of Line Organization


Over reliance- The line executives decisions are implemented to the
bottom. This results in over-relying on the line officials.
Lack of specialization- Inadequate communication- Lack of Co-ordination
- Authority leadership- The line officials have tendency to misuse their
authority positions. This leads to autocratic leadership and monopoly in the
concern.

Line and Staff Organization

Line and staff management has two separate hierarchies:


(1)The line hierarchy in which the departments are revenue generators
(manufacturing, selling), and their managers are responsible for achieving the
organization's main objectives by executing the key functions (such as policy
making, target setting, decision making); Does actual execution of the work
and has direct line authority.
(2) The staff hierarchy, in which the departments are revenue consumers,
and their managers are responsible for activities that support line functions
(such as accounting, maintenance, personnel management). While both
hierarchies have their own chains of command, a line manager may have
direct control over staff employees but a staff manager may have no such
power over the line employees. In modern practice, however, the difference in
the two hierarchies is not so clear-cut and jobs often have elements of the
both types of functions. Staff or specialists attached to the line manager to
advice them on important matters. Staff relationship is purely advisory.
Eg. Assistant to president, HR Mgr.

Line
Authority

----Staff
Authorit

Pros and Cons of Line & Staff Org.


Pros
Specialization- Expert Advice Relief
to Line Executives
- Flexibility: Staff can be added to line
without disturbing the line procedures.
Cons

- Confusion , Conflict , Expensive

Functional Organization
A functional organization structure is a
hierarchical type of organization structure
wherein people are grouped as per their area of
specialization. It allows decisions to be
decentralizedsince issues aredelegatedto
specialized persons or units, leaving them the
responsibility of implementing, evaluating, or
controlling the given procedures or goals.
F.W Taylor coined term Functional
Foremanship
to provide specialized skills at superior level.

F.W. Taylor recommended eight bosses i.e. route clerk, instruction card
clerk, time & cost clerk and disciplinarian for the office and
Gang boss, speed boss, inspector and repair boss for the factory.

Under Functional org. , the entire work is divided into


major functions. Every function is placed under the
charge of a specialist.
A functional specialists directs all the subordinates
lower to his line for all the works of his function. In
other words, all the lower level subordinates are to
report to every functional manager regarding for
performance of related functions under every
functional manager.

Pros and Cons of Functional Org


Pros Specialization , Efficiency and
Productivity,
ExpansionIt offers a greater scope for expansion as
compared to line organization & Doesnt face the problem of limited
capabilities of a few line managers.

Cons -

(1) ConfusionThe operation of functional organisation is too


complicated. Workers are supervised by a number of bosses
(2) Lack of coordinationUnder this, the work is divided into parts and subparts. It poses difficulties in coordinating the functioning of different parts.
(3) Difficulty in fixing responsibility Because of multiple authority, responsibility
for poor
performance cannot be fixed easily on a particular person.
(4)

Conflict-Supervisory staff of equal rank may not always agree on certain issues.

Committee Organization
A committee is a group of people
who
meet to plan, to discuss or make a
decision for a particular subject.

Project Organization

In projectized organizations, the project manager is in charge


of his project, and he has full authority over it. Everyone in
his team reports to him. The projected organization structure
is opposite to thefunctional organization structure. Here,
either there will be no functional manager, or if he exists, he
will have a very limited role and authority.
Advantages of a Projectized Organized Structure - clear line
of authority - shorter lines of communication which creates
strong and effective communication- less time is consumed
in communication, and response to stakeholders concerns is
fast.
Disadvantages of a Projectized Organization Structure - work
environment stressful - sense of insecurity - cost of
employees and equipment can be higher

Project Org.

Temporary organisation designed to achieve specific


results by using teams of specialists from different
functional areas in the organisation.

Matrix Structures
Matrix Structure
uses permanent cross functional
teams to try to gain the advantages of
both the functional and divisional
approaches.
Matrix forms are hybrids
Some hybrids combine a mostly
functional structure with one or more important
products or markets, e.g., North America
Some hybrids combine a mostly divisional
structure with one or more important functions,
e.g., marketing

ORGANIZATION STRUCTURES

Matrix Structures

Potential Advantages of Matrix Structures


Performance accountability rests with program, product, or project
managers.
Teams enable better communication and cooperation across functions.
Teams make more decisions and solve more problems at their levels.
Top managers spend more time on strategic issues.
A cross-functional team brings together members from different
functional departments.

The Mr. / Mrs. Right Organizational


Form

There is no right way to organize

Organization are not Pure but mixed

Departmentation is never permanent

Team Structures
Team Structures
Product Team Structure

The members are permanently assigned to the team and empowered to bring a product to market.
Avoids problems of two-way communication and the conflicting demands of functional and product team bosses.
Cross-functional team is composed of a group of managers from different departments working together to perform
organizational tasks.

make extensive use of permanent and temporary teams, often cross functional, to improve
communication, cooperation, and problem solving.

Potential Advantages of Team Structures


Team assignments improve communication, cooperation, and
decision-making.
Team members get to know each other as persons, not just job
titles.
Team memberships boost morale, and increase enthusiasm and
task involvement.

Divisional
Organization
al Structure:
In this type of structure,
the organisation can
have different basis on
which departments are
formed. They are:
(i) Function,
(ii) Product,
(iii) Geographic
territory,
(iv) Project and
(iv) Combination
approach.

Product
Product Team
Team Structure
Structure

Copyright 2004 McGraw-Hill. All rights reserved.

Figure 7.6b

762

ORGANIZATION STRUCTURES

Network Structures
Network structures maintain a staff of core
fulltime employees and use contracted
services and strategic alliances to accomplish
many business needs.

ORGANIZATION STRUCTURES

Virtual Structures
Virtual Structure
Uses information technologies to operate as a
shifting network of alliances.
MANAGEMENT TIPS
Seven deadly sins of outsourcing:
1. Outsourcing activities that are part of the core competency
2. Outsourcing to untrustworthy vendors
3. Agreeing to unfavorable contracts with the vendor
4. Overlooking impact on existing employees
5. Not maintaining oversight; losing control to vendors
6. Overlooking hidden costs of managing contracts
7. Failing to anticipate need to change vendors or cease outsourcing

Strategic business unit (SBU) is a unit of


the company that has a separate mission and
objectives that can be planned separately from
other company businesses

Company division

Product line within a division

Single product or brand

Growth share matrix is a portfolio planning method that


evaluates a companys strategic business units in terms
of their market growth rate and relative share
Strategic business units are classified as:

Stars

Cash Cows

Question marks

Dogs

Question mark

Cash cow

Dog

High

Star

Low

Market growth rate

BCG Growth-Share Matrix

High

Low

Relative market share


2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing for Hospitality and Tourism, 4th edition


Kotler, Bowen, and Makens

Relative Market share A method of measuring market share.


A company will measure its own market share comparing with market shares
of its competitors.
Market growth rate increase in size or sales observed within a given consumer
Group over a specified time frame.

A contingency theory is an
organizational theory that claims
that there is no best way to
organize a corporation, to lead a
company, or to make decisions.
Instead, the optimal course of
action is contingent (dependent)
upon the internal and external
situation

Which contingency factors


influence organizational
design?
Environment, strategy,
technology, size, and
people are all contingency
factors influencing
organizational design.
Technology -- Best use of
technical knowledge,
equipment, and work methods
in the transformation process,
is an important consideration
in organizational design.
Environments : Change in the
business environment affects
org. structures. Micro & Macro
Environment.
Size : Size affects
organizational design. Large
organization have complex
structures.
Strategic Choice : When
strategy changes, structures must

Ethical Issues and


Organizational Design (Cont.)
Ethical issues about reducing the
size of an organization and
increasing its efficiency. A
utilitarian analysis looks at the
net benefits of managements
actions
High conflict and ambiguity of
matrix organizations can act as a
significant stressor
Moving to the alternative forms is
large-scale organizational change
and stress for many people

Females are very much interested to


work in

Banks.
- Sheikh Nayeem

Dpt

Key Points :
Motivation: Gates uses stock options to attract and retain employees
Employees have become millionaires.
Staffing : Very Effective Human Resource ,Talents selecting Process
Selection of Right kind of employee
Flexible Working Hours
Stress Mgt : Exercise Rooms
Simple Structure with easy flow of Information among product teams.

For Development
of Win Operating
Eg. Hybrid / Team Organization Structure i.e Project Org
with effective cordination & flow of Communication
System
Gates

Finance Dpt

Mktg Dept

Prjct Mgr- Graphics


Person A
Person B
Person C
Person D
Person E

Prjct Mgr- Apps

Case
Leo Harris, one of your assistants in a fire insurance company, is in charge of a
group of
clerical workers who review changed policies, calculate commissions, and
maintain records.
He is very hard working and everything coming out of his group is perfect. He
does not delegate authority and responsibility but rechecks in detail all the work
turned out by his group.
He keeps turning back to them careless and inaccurate work until it is perfect.
As a
result he is busy from early morning until late at night doing detail work and
neglecting his
role as supervisor. His workers have figured him out and are taking it easy. They
do slap-dash work and correct it as often as he returns it.
You are afraid that Harris is overworking and heading for a nervous breakdown.
You have
told him in general terms to delegate authority and responsibility and to
discipline his group.
He says that you just cant find people any more who have pride in their work or
concern for
the company and that if he fires any of his people or they quit the replacements
would
probably be worse.

1. What are some of the reasons why people do not delegate authority and
responsibility?
2. How should he go about delegating authority to them?
3. What are some of qualities that Harris lacks?

1. Fear of loosing controlling Power,


Dont want to compromise in quality,
No confidence on subordinates & others.
2. a. Start selecting capable worker and teach them to
mentor others. Give them some responsibility of the
work.
b. Motivate good workers.
c. Workers with minimum faults can be given some
incentives
for motivation.
3. a. Leadership qualities

b. Team maker

4. Start with selection of skilled and meritorious


workers, make
them foreman/supervisor, cordial relationship with all ,
motivate them for better works with some rewards.

Queries ?
Wednesday, March 9, 2016

Drafted by Sheikh Nayeem

83

My name is Sheikh Nayeem


& my blood group is Be
Positive