Organisational Design

Dr. Prerna Sharma

Meaning

Organisational Design is the continuous

monitoring and assessing of the fit between the
goals , structures and rewards, the creation and
choice of alternative actions where there is no
fit and the implementation of the chosen
design.
Factors involved in organisational
design

▪ Span of control
▪ Line and staff relationship
▪ Committees and group decision
making
Need and Significance of Organisational
Design

▪ Division of work
▪ Coordination
▪ Fixation of Responsibility
▪ Planning and Controlling
▪ Relationships
▪ Reduction in Wastages
▪ Optimum use of resources
▪ Team spirit
Factors influencing Organisational
Design

▪ Technology
▪ Environment
 Customers
 Competition
 Suppliers
 Channel Intermediaries
▪ Strategic Factors
 Low cost Strategy
 Differentiation Strategy
 Focussed Strategy
TYPES OF ORGANISATIONAL DESIGN

▪ TRADITIONAL ORGANISATION DESIGN

 Functional Design
 Place Design
 Product Design
 Multidivisional Design
▪ CONTEMPRARY ORGANISATIONAL DESIGN
 Multinational Design
 Network Design
 Virtual Organisation
ORGANISATIONAL STRUCTURE

Pattern of relationships among

individuals and departments in
an organisation. It is a
framework through which
organisation operates.
▪ Pattern of Relationships
▪ Duties and Responsibilities
▪ Existence of Purpose
▪ Two Dimensions
STEPS IN ORGANISATION STRUCTURE

▪ Defining Organisational goals

▪ Determining activities to achieve goals
▪ Grouping of activities
▪ Making arrangement of resources
▪ Assignment of duties
▪ Granting of authority
▪ Superior-subordinate relationship
▪ Co-ordination
TRADITIONAL ORGANISATION STRUCTURE

Line Organisation Structure

▪Direct flow of authority
▪Responsibility flows upwards
▪Reporting to one superior
▪Scalar Chain and Unity of Command
▪No staff relationship
Advantages

▪ Simplicity
▪ Quick decision making
▪ Discipline
▪ Clear definition of authority
▪ Easier supervision and control
▪ Coordination
▪ Development
▪ Flexibility
Disadvantages

▪ Burden on executives
▪ Autocratic leadership styles
▪ Lacks specialisation
▪ Retards expansion
▪ Lack of initiative
▪ Not suitable for large organisation
▪ Problem of strict supervision
▪ Overdependence on executives
Functional Organisation Structure

▪ Advantages: Specialisation
▪ Mass Production
▪ Co-ordination
▪ Reduced pressure on duties
▪ Effective Supervision
▪ Scope of functional improvement
▪ Optimum use of resources
▪ High efficiency
Limitation

▪ Lack of unity of command

▪ Divided responsibility
▪ Conflict
▪ Unsuitable for non – manufacturing units
▪ Delay in decision making
▪ Difficulties in coordinating different functions
▪ Expensive
▪ Separation of planning from doing
Line and Staff Function

▪ Advantages : Specialisation
▪ Sound Decisions
▪ Unity of Command
▪ Less burden on line executives
▪ Development opportunities
▪ Well defined authority and responsibility
▪ Suitable for large concerns
▪ Systematic planning and control
Disadvantages

▪ Conflicts
▪ Too much dependence on staff
▪ Irresponsible staff
▪ High Operating cost
▪ Staff lacks authority
▪ Delay in decision making
▪ Shifting of responsibility
DEFICIENCIES/WEAKNESSES OF THRADITIONAL
STRUCTURES

▪ Roles, authorities, responsibilities are rigidly defined.

▪ Suitable only in case of stable environments
▪ Limited scope for managerial developments
▪ Focuses on downward communication
▪ Too much strict control
▪ Too many formalities
▪ Decisions on basis of established policies
▪ Centralised at top & not suitable for complex activities
ORGANISATIONS FOR THE FUTURE:TYPES/MODERN
ORGANISATIONAL STRUCTURES

▪ Project Structure :
Advantages : Suitable for complex projects of longer durations
Encourages creativity
Does not disturb routine of existing functional departments
Disadvantage :
Problem of coordination
Temporary
No authority on financial resources
MATRIX ORGANISATION

▪ Advantages :
Top Management can concentrate on Strategic Planning
Responds to changes in environment
Specialisation
Optimum use of resources
Inter departmental cooperation
Developmental skills
Higher efficiency & sound decisions
DISADVANTAGES

▪ Increase in work load

▪ High cost
▪ Absence of unity of command
▪ Power struggle
▪ Difficulty of balance
▪ Morale
▪ Complex Nature
▪ Shifting of Responsibility
PROJECT ORGANISATION V/S MATRIX
ORGANISATION

PROJECT ORGANISATION MATRIX ORGANISATION

Group of projects that are highly complex and Uses two or more co-existing structures
technical.
Independent Dependent
Staff reports to project manager in respect of Functional staff reports to functional manager
project activities & project manager
Limited Role of functional manager Important role
Simple Complex
Temporary staff Permanent staff
Free Form Structure

▪ Rarely adopted
▪ Highly flexible
▪ No superior subordinate relation
▪ Suitable for sophisticated activities