Samir K Mahajan, M.Sc, Ph.D.,UGC-NET Assistant Professor (Economics) Department of Mathematics & Humanities Institute of Technology Nirma University ORGANIZATION STRUCTURE

Meaning Organizing is bringing together the activities and resources of the enterprise in such a way that objectives are achieved in the shortest possible time, in an orderly manner, with maximum utilisation of the resources. In other words, organising is arranging and grouping jobs, allocating resources, and assigning work so that activities can be accomplished as planned. ORGANIZING

Organizational Concepts  Division of labour is splitting/sub-division of a task /job/ assignment into smaller individual tasks, and allocating the tasks to different individuals or group of individuals according to the skills and/or equipment those people or organizations possess  Work Specialization is the degree to which tasks/jobs in the organization are sub- divided into separate jobs with each step completed by a specialized persons. It calls for utilization for skills or use of specialized peoples. Work Specialization increases work efficiency.

 Hierarchy Hierarchy is system in which members of the organization is ranked according to status or authority.  Unity of Command Unity of Command is the management principle that no person should report to more than one boss.  Span of control Span of control refers to the number of subordinates a manager can direct efficiently and effectively.  Chain of command/line of authority Chain of command is the continuous line of authority that extends from upper level of an organization to the lowest level of the organization and clarifies who reports to whom. Span of control used in an organization determines whether the structure is tall or flat.  Scalar Principle Scalar Principle prescribes that the authority and responsibility should flow in a straight from from the highest to the lowest manager. Organizational Concepts contd.

 Differentiation /Departmentalisation Differentiation is the process by which tasks and activities of an organization are segmented into smaller groups. The basis for differentiation may be function, product, location and customer.  Integration Integration is the process by which differentiated groups are pulled together to contribute towards the common organizational objectives.  Power An individual’s capacity to influence decisions.  Authority Authority is formal and legitimate right of a manager to make decisions, issue orders, and to allocate resources to achieve objectives of the organization. Organizational Concepts contd.

 Delegation Delegation is the sharing or handling over of authority and responsibility to a subordinate.  Responsibility Responsibility is an obligation to perform assigned activities. Managers are assigned authority in commensurate with responsibility  Centralization Centralization means concentration of power and authority. In a centralized enterprise, authority is located near the top of the organization.  Decentralization Decentralization means authority is pushed downward to lower organizational levels.  Formalization Formalization is the degree to which jobs within the organization are standardized, and the extent to which employee behavior is guided by rules and procedures. Organization Concepts contd.

Organizational Structure Organizational Structure is the hierarchical arrangement of lines of authority, communications, rights and duties of members in an organization. Organizational structure determines how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management. It clarifies the formal pattern of relationships of individuals in the various positions within the organization, highlights lines of communication, and reflects the means for channeling authority and making decisions. Organizational Structure

Span of Control and Organizational structure Span of Control used in an organization determines whether the structure is tall or flat The trend has been toward wider spans of control. o Tall Organizational Structure o Flat Organizational Structure

Flat organization ( horizontal or structure refers to an organization structure with few or no levels of management between management and staff level employees. Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels. The flat organization supervises employees less while promoting their increased involvement in the decision-making process. This structure is generally possible only in smaller organizations or individual units within larger organizations. Flat Organisation Structure Flat Organization

Tall Organizational Structure Tall (vertical) organizational structure has many levels of hierarchy. In these organizations, there are usually many managers, and each manager has a small span of control. Tall structures tend to be more complicated. Tall structure has a narrow span and more hierarchical levels. Large, complex organizations often require a taller hierarchy. A hierarchical organization follows the layout of a pyramid. Every employee in the organization, except one, usually the CEO, is subordinate to someone else within the organization.

Organization design Organization design is a process in which managers develop or change their organization’s structure. Different Organizational Designs  Three traditional organizational designs o Simple structure o Bureaucracy structure o Matrix structure  Some new design options o Team Structure o Virtual Organization o Boundary less organization Organization Design

Simple Structure Simple organizational structures are characterized by a low degree of differentiation of subtasks, and the leaders often have a very wide span of control. The authority is heavily centralized in a single person, who will oftentimes be the owner of the company. Formalization will also be low, and work will oftentimes be structured through direct control and supervision. The simple structure is a "flat structure". Simple Structure has low departmentalization, wide spans of control, centralized authority, little formalization Organization Design contd.

Bureaucratic Organisation A bureaucratic organization is high departmentalization by function, narrow span of control, centralized authority, high formalization. It is characterised with rigid and tight procedures, policies and constraints, and defined set of rules and regulations. ; and the company reacts with stringent controls as well as a reluctance to adapt or change. Bureaucracy may be found in large and small, formal or informal, public or private organizations, such as government, corporations,, schools, universities, political parties. Organization Design contd.

The Matrix Structure The matrix structure is a combination of the functional and divisional structures. The former divides departments within a company by the functions performed, while the latter divides them by products or customers or geographical location or projects. Two chains (functional and divisional )of command exist. Organization Design contd.

Team Structures Team structures is created to accomplish specific tasks in which employees come from various functional department. It requires both generalists as well as specialized employees. The entire organization is made up of work groups or self-managed teams. Organization Design contd.

Virtual Organization /Network Organization A virtual /network organisational structure usually involves more than one organisation working together to produce a particular good or service. Administration is the primary function performed; other functions—such as marketing, engineering, production, and finance—are outsourced to other organizations or individuals. A virtual organization is geographically apart, the member of the organisations usually communicate and co-ordinate through information technology (computer, and groupware). Organization Design contd.

Virtual Organization /Network Organization contd Organization Design contd.

A boundaryless organization is an organization that is not defined by, or limited to by a predefined structure. In such an organisation, communication is direct with limited formalities or unnecessary bureaucracy. The boundary less organization seeks to eliminate the chain of command and has limitless spans of control and replace departments with empowered teams. Such organisational model was coined by Jack Welch, former General Electric CEO Boundaryless Organization Organization Design contd.

Departmentalization and Organization Structure Departmentalization is the basis by which jobs are grouped together. Grouping Activities are done by  Function  Division such as: product, geography, process, customer

Functional Departmentalization In functional departmentalization, grouping of activities are done by functions performed such as marketing, manufacturing, finance, accounting, human resources, and people are grouped together in departments by common and specialized skills. Functional structures tend to be effective when an organization does not have a large number of products and services requiring special attention. Departmentalization contd. CEO Marketing Product X Product Y Finance Product X Product Y Purchasing Product X Product Y Manufacturing Product X Product X Human Resource Product X Product Y

In organizations using divisional structures, departments represent the unique products, services, customers, or geographic locations the company is serving. Within each department, functions such as marketing, manufacturing, and other roles are replicated. In these structures, the senior manager act like generalists as opposed to specialists. Instead of performing specialized tasks, employees will be in charge of performing many different tasks in the service of the product. Divisional Departmentalisation Departmentalization contd. Divisional Departmentalisation may introduced be by:  Product  Project  Geography or territory  Customer  Process

Product departmentalization is grouping activities by product line. Separate departments are established for each of the product category or services in which the enterprise does business. Each major product area in the corporation is under the authority of a senior manager who is specialist in, and is responsible for, everything related to the product line. Product Departmentalization Departmentalization contd.

Customer departmentalization is grouping activities on the basis of common customers or types of customers. Self-contained departments are organized to serve the needs of specific groups of customers. The sales activities in an office supply firm can be broken down into different departments. Director Sales Manager, Govt Account Manager, Military Account Manager, Corporate Account Manager, Small Account Manager, Wholesale Account Customer Departmentalization Departmentalization contd.

Geographic (Territorial) Departmentalization Geographic departmentalization is grouping activities on the basis of territory. Separate departments are established for each of the territories if an organization's customers are geographically dispersed. Vice Presidents Sales Sales Director, Western Region Sales Director, Eastern Region Sales Director, Southern Region Sales Director, Northern Region Departmentalization contd.

Process Departmentalization is grouping of activities by work or customer flow. Here, departments are separated based on their role in a production process. Plant Manager (Textile Mill) Spinning Department Weaving Department Dying Department Printing Department Inspecting and Shipping Department Process Departmentalization Departmentalization contd.