Organization structure

Organization structure

Organization structure OS can be defined as the way or method through use of a hierarchy that a group, business, organization, people or objects collaborate to achieve success on one common goal.

- Organizations develop some deliberate structure so
ORGANIZATIONAL STRUCTURE & DESIGN 3 Common Characteristics of Organizations Structure - Organizations develop some deliberate structure so that their members can do their work. 3

Designing Organizational Structure
Organizational Structure: Formal system of task and job reporting relationships Organizational Design: Arrangement of tasks and job relationships that comprise the organizational structure

Organizational Design
Organizational Design - the process of constructing and adjusting an organization’s structure to achieve its goals. the linking of departments and jobs within an organization H. Mintzberg, The Structuring of Organizations, Prentice Hall, © 1979, 301. Reprinted by permission of Prentice-Hall, Inc, Upper Saddle River, NJ. 2

Definition Organization Design refers to the process of coordinating the structural elements of an organization in the most appropriate manner.

Defining Organizational Structure
The formal arrangement of jobs within an organization. Organizational Design A process involving decisions about six key elements: 1.Work specialization 2.Departmentalization 3.Chain of command 4.Span of control 5.Centralization and decentralization 6.Formalization

ORGANIZATIONAL STRUCTURE & DESIGN 1.Work Specialization
Work Specialization is dividing work activities in an organization into separate job tasks. 9

ORGANIZATIONAL STRUCTURE & DESIGN 2.Departmentalization
Departmentalization refers to the basis by which jobs are grouped together. 10

ORG'L STRUCTURE & DESIGN 5 Common Forms of Departmentalization
1. Functional 2. Product 3. Geographical 4. Process 5. Customer 11

Departmentalization by Type
Functional Grouping jobs by functions performed Product Grouping jobs by product line Geographical Grouping jobs on the basis of territory or geography Process Grouping jobs on the basis of product or customer flow Customer Grouping jobs by type of customer and needs

1.Functional Departmentalization - groups jobs by functions performed 13

Exhibit 10–2 Functional Departmentalization
Advantages Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations Coordination within functional area In-depth specialization Disadvantages Poor communication across functional areas Limited view of organizational goals

2.Product Departmentalization - Groups jobs by product line 15

Exhibit 10–2 (cont’d) Product Departmentalization
+ Allows specialization in particular products and services + Managers can become experts in their industry + Closer to customers – Duplication of functions – Limited view of organizational goals

3.Geographical Departmentalization - groups jobs on the basis of geographical region 17

Exhibit 10–2 (cont’d) Geographical Departmentalization
Advantages More effective and efficient handling of specific regional issues that arise Serve needs of unique geographic markets better Disadvantages Duplication of functions Can feel isolated from other organizational areas

4.Process Departmentalization - groups jobs on the basis of product or customer flow 19

Exhibit 10–2 (cont’d) Process Departmentalization
+ More efficient flow of work activities – Can only be used with certain types of products

5.Customer Departmentalization - groups jobs on the basis of specific and unique customers who have common needs 21

Exhibit 10–2 (cont’d) Customer Departmentalization
+ Customers’ needs and problems can be met by specialists - Duplication of functions - Limited view of organizational goals

ORG'L STRUCTURE & DESIGN 3.Chain of Command
The chain of command is the line of authority extending from upper organizational levels to the lowest levels, which clarifies who reports to whom. 23

ORG'L STRUCTURE & DESIGN 3 Elements of Chain of Command
1. Authority 2. Responsibility 3. Unity of Command 24

1.Authority refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it. 25

2.Responsibility refers to the assumption of obligations by the employees to perform any assigned duties. 26

3.The Unity of Command principle helps preserve the concept of a continuous line of authority. 27

ORGANIZATIONAL STRUCTURE & DESIGN 4.Span of Control
Span of Control refers to the number of employees a manager can efficiently and effectively manage. 28

Organization Structure (cont’d)
Span of Control The number of employees who can be effectively and efficiently supervised by a manager. Width of span is affected by: Skills and abilities of the manager Employee characteristics Characteristics of the work being done Similarity of tasks Complexity of tasks Physical proximity of subordinates Standardization of tasks

ORGANIZATIONAL STRUCTURE & DESIGN 5.Centralization
Centralization refers to the degree to which decision making is concentrated at upper levels of the organization. 30

Exhibit 10–4 Factors that Influence the Amount of Centralization
More Centralization Environment is stable. Lower-level managers are not as capable or experienced at making decisions as upper-level managers. Lower-level managers do not want to have a say in decisions. Decisions are relatively minor. Organization is facing a crisis or the risk of company failure. Company is large. Effective implementation of company strategies depends on managers retaining say over what happens.

ORGANIZATIONAL STRUCTURE & DESIGN 6.Formalization
Formalization refers to how standardized an organization's jobs are and the extent to which employee behavior is guided by rules and procedures. 32

Formalization The degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures. Highly formalized jobs offer little discretion over what is to be done. Low formalization means fewer constraints on how employees do their work.

Formalization How standardized are the jobs?
high formalization means employees have little discretion low formalization means employees have more freedom

Organization Purpose:
An Organization Purpose Statement answers one fundamental question: “Why should we come to together as a team for the organization?” This statement serves as a clear, meaningful guide to direct the team in its work - i.e., what to do Six steps help a team determine and accomplish its Organization Purpose 1. Explore and understand what the team wishes to accomplish for the organization 2. Create and document an Organization Purpose Statement 3. Commit to the Organization Purpose “as a team” 4. Declare the statement to the remainder of the organization, holding itself accountable for the achievement of the Organization Purpose 5. Refer to and align with the Organization Purpose Statement during all work sessions 6. Achieve it! 35

Principles of organizational structure
Specialization Horizontal Vertical Coordination Unity of command Scalar principle Responsibility and authority principle Span of control Departmentalization - functional - product - users - territory - process or equipment De-centralization and centralization Line and staff relationships

Classic organizational structure
Simple centralized design Bureaucratic organization Divisionalized organization Modern organizational design Project organization Matrix organization

Classical organizational structure
In a simple centralized organizational structure, power, decision making authority and responsibility for goal setting are vested in one person at the top. This structure is usually found in small and single-person-owned organizations. The basic requirement of a simple centralized structure is that it has only one or two functions, and a few people who are specialists in critical functions. The manager is generally an expert in all related areas of functions and is responsible for coordination. Thus, the organization has only two hierarchical levels. However, this structure has to become more complex for growth, diversification or other reasons.

Classic organizational structure
1. Simple centralized design 2. Bureaucratic organization 3. Divisionalized organization

The Bureaucratic Organization
In large organizations and under well defined conditions, organization structure may be bureaucratic. The essential elements of a bureaucratic organization are: · the use of standard methods and procedures for performing work; and · a high degree of control to ensure standard performance. Figure 1 illustrates a bureaucratic organizational structure.

Bureaucracy Strengths Weaknesses
standardizes activities in an efficient manner economies of scale, minimum duplication of personnel and equipment lower quality employees are acceptable, which reduces employment costs Weaknesses creates subunit conflicts there is an obsessive concern with following rules

Figure 1. Bureaucratic organizational structure

The Divisionalized Organization
Divisionalized organizational design refers to a multiproduct or service design that separates different products or services to facilitate management planning and control. Different divisions in the organization can further have simple centralized or functional designs, depending upon their size and activities. This type of organizational design is favoured when different kinds of products or services require different kinds of management.

Modern organization designs
Modern approaches to organizational design include project, matrix and adhocracy types.

Modern organizational design
Project organization Matrix organization Adhocracy or Organic organizational structure

Project design Project design is also called the team or task force type. It is used to coordinate across departments for temporary, specific and complex problems which cannot be handled by a single department. This design facilitates inputs from different areas. Members from different departments and functional areas constitute a team, in which every member provides expertise in their area of specialization. Such a structure generally coexists with the more traditional functional designs. An illustration of project type of the organizational structure is given in

Figure 2. A Project-type organization

Matrix Organization Matrix Organization
The matrix design blends two different types of designs, namely project and functional organizational designs (Kolodny, 1979). Since the project type of organizational design is not considered stable, the matrix design attempts to provide permanent management structures by combining project and functional structures. The main advantage of this combination is that the matrix design balances both technical and project goals and allocates specific responsibilities to both. Technical goals refer to how well work is done, while project goals relate to issues such as type of work to be done and its costs. Figure 3 shows a very simplified matrix organization design in which department heads have line authority over specialists in their departments (vertical structure). Functional specialists are assigned to given projects (horizontal structure). These assignments are made at the beginning of each project through collaboration between appropriate functional and project managers.

Requirements for a matrix organization
- Well-defined charters - Communication - Planning - Teamwork - Willingness to compromise - Good management skills

Adhocracy Adhocratic structures are also called 'free form' or organic organization structures. They stress managerial styles which do not depend upon formal structures. They are well suited for complex and non-standard work and rely on informal structures. An adhocratic structure is flexible, adaptive and organized around special problems to be solved by a group consisting of experts with diverse professional skills (Robbins, 1989). These experts have decision making authority and other powers. The adhocratic Structure is usually small, with an ill-defined hierarchy. Such a design is suitable for high technology and high growth organizations where an arranged and inflexible structure may be a handicap. Figure 4 illustrates an adhocratic type of organizational structure

Adhocratic organizational structure

Organisation Structure refers to the pattern of relationships among individuals and department in an organisation Organisation Structure is the framework through which the organisation operates. Classification of organisation structure is based on various activities which are grouped together to create departments and units & prescribing their relationships in the organisation.

There are 7 types of Organisation Structure
Line Line & staff Functional Divisional Project Matrix Free-form

Line Organisation Structure
Lines of authority and instructions are vertical, i.e. they flow from the top to the bottom. The unity of command is maintained in a straight and unbroken line. It implies that each subordinate receives instructions from his immediate superior alone and is responsible to him only.

All persons at the same level of org. are independent of each other.
This structure specifies responsibility and authority for all the positions limiting the area of action by a particular position holder.

Line & Staff Organisation Structure
Refers to a pattern in which staff specialists advise managers to perform their duties. Staff managers provide advice to the line manager who are generally specialists in the field. Staff positions are purely advisory in nature. They have a right to recommend but have no authority to enforce their preference on other dept. The line executives are the “DOERS” or commanders, where as, the specialists are the “THINKERS” or advisors.

Functional Organization

Functional structure is created by grouping the activities on the basis of functions required for the achievement of organisational objectives. Functions classified into “Basic”, “Secondary” & “Supportive” functions according to their nature and importance. E.g. of basic functions would be production, marketing, in manufacturing organisation. Authority relationships in functional structure may be in the form of line, staff & functional.

Characteristics of functional structure:
Specialization by functions Emphasize on sub goals Pyramidal growth of the organization Line and Staff organisation Functional authority relationships among various departments. Limited span of management and tall structure.

LINE-DISCIPLINE ORGANIZATION

Line-commodities and production areas organization

RESPONSIBILITIES AND INTERESTS OF MATRIX RESEARCH ORGANISATIONS

Span of Control Span of control refers to the number of subordinates who report directly to a single manager or supervisor High span of control has a direct link to: Greater employee empowerment Faster decision making processes Improved communications Greater organizational flexibility Reduced personnel and overhead costs Increased delegation resulting in improved job satisfaction

Span of Control The number of employees who can be effectively and efficiently supervised by a manager. Width of span is affected by: Skills and abilities of the manager Employee characteristics Characteristics of the work being done Similarity of tasks Complexity of tasks Physical proximity of subordinates Standardization of tasks

Span of Control Span of Control This refers to the number of specialized activities or individuals supervised by one person. Deciding the span of control is important for coordinating different types of activities effectively. According to Barkdull (1963), some of the important situational factors which affect the span of control of a manager are: · similarity of functions; · proximity of the functions to each other and to the supervisor; · complexity of functions; · direction and control needed by subordinates; · coordination required within a unit and between units; · extent of planning required; and · organizational help available for making decisions.

Factors that Influence Span of Control
Job complexity More complex jobs = more managerial input Job similarity Similar jobs = more employees per manager Geographic proximity of employees Dispersed locations = more supervision Amount of coordination to complete tasks High coordination = more supervision

Factors that Influence Span of Control
Employee abilities Knowledgeable, trained staff = less supervision Employee empowerment Employees who are trusted and empowered to make decisions need less supervision Ability of management More capable management = more employees per manager

Span of Control The number of organizational members who report to a manager Wide span of control means one manager supervises many members Narrow span of control means one manager supervises a small number of members

Tall Hierarchy: Low Span of Control

Organizational Factors Supporting Narrow Span of Control
High levels of diversity and complexity of work performed by an organization The extent to which coordination and interdependence is important between employees and groups Large amounts of change in the work environment Greater geographic dispersion Large administrative burdens High employee expectations and needs regarding development and career counseling.

Flat Hierarchy: Wide Span of Control

Organizational Factors Supporting Large Span of Control
Experienced people who are well selected and developed Employees who can function with little supervision and monitor their own performance Job design and tools that give employees direct performance feedback Success of self managed teams

Authority Again, he uses the ideal type to begin to address these questions. Weber distinguished three main types of authority: Traditional Authority Rational-legal Authority Charismatic

Authority Traditional authority often dominates pre- modern societies. It is based on the belief in the sanctity of tradition, of "the eternal yesterday."

Authority Rational legal authority is anchored in impersonal rules that have been legally established. This type of authority (which parallels the growth of zweckrational) has come to characterize social relations in modern societies.

Authority Finally, charismatic authority rests on the appeal of leaders who claim allegiance because of the force of their extraordinary personalities.

Definition of Delegation
Achieving performance of care outcomes for which you are accountable and responsible by sharing activities with other individuals who have the appropriate authority to accomplish the work (Yoder-Wise, 2008). 77

Four Components of Delegation
care outcomes - patient care is safely provided accountable and responsible - both RN and delegatee have an obligation to care for that patient and ensure the task is completed sharing activities – both the RN and delegatee work together to accomplish care appropriate authority – the RN selects the appropriate person to delegate the task 78

Need for Delegation Increased acuity of patients
Increased use of Unlicensed Assistive Personnel (UAPs) and Practical Nurses (PN) Increased RN responsibilities in the management of the nursing unit/organization Accelerated pace and changing health care environment.

Five Rights of Delegation
Right Task Right Circumstance Right Person Right Communication Right Supervision 80

Conclusion Delegation is a powerful tool when used correctly can create an effective and safe environment in which staff and patients work together to achieve positive outcomes. 81

Decentralization

More Decentralization
Exhibit 10–4 (cont’d) Factors that Influence the Amount of Centralization More Decentralization Environment is complex, uncertain. Lower-level managers are capable and experienced at making decisions. Lower-level managers want a voice in decisions. Decisions are significant. Corporate culture is open to allowing managers to have a say in what happens. Company is geographically dispersed. Effective implementation of company strategies depends on managers having involvement and flexibility to make decisions.

Centralization and Decentralization
Are decisions concentrated at top (centralization) or pushed to lower levels (decentralization)? There is a marked trend toward decentralization

Departmentalization The process of breaking up organizations into coherent units. Functional Organization: The type of departmentalization based on the activities or functions performed (e.g., sales, finance). Product Organization: The type of departmentalization based on the products (or product lines) produced. Matrix Organization: The type of departmentalization in which a product or project form is superimposed on a functional form.

Functional Organization

Product Organization

Matrix Organization

Basic Life-Cycle Phases
Organizational Birth Entrepreneur pursues an opportunity – struggle to become established Organizational Growth Struggle for survival and development of competencies Organizational Decline Struggle to maintain effectiveness and change to survive Organizational Death Dissolution of the organization

Organizational Birth Founder starts the organization with the help of dedicated followers Riskiest stage of the life cycle – where the vast majority of organizations fail Must secure the resources necessary to compete against established competitors and survive despite strong barriers to entry into the environment Being a pioneer in a new market is even riskier for a new firm – liability of newness

Organizational Growth
Successful organizations grow by building on strengths and overcoming obstacles The organization develops the structures it needs to continue to succeed, and addresses the challenges we have talked about Two theories explain growth patterns in organizations: Institutional theory Greiner’s life-cycle model of growth

Greiner’s Life-Cycle Model
Stage 5 Large Stage 1 Stage 2 Stage 3 Stage 4 5. Crisis of ? 4. Crisis of red tape 5. Growth through 3. Crisis of collaboration control 4. Growth through Size of organization 2. Crisis of coordination autonomy 3. Growth through 1. Crisis of delegation leadership 2. Growth through direction 1. Growth through creativity Small Young Mature Age of organization 11 -

Greiner’s 5 Stages/Crises
Growth through creativity – entrepreneurial Crisis - Leadership Growth through Direction – collectivity Crisis – Lack of autonomy Growth through Delegation – differentiation Crisis – Lack of control Growth through Coordination – formalization Crisis – Too much Red Tape Growth through collaboration Crisis - ? Restructuring or decline

Organization Decline Life-cycle stage that an organization enters when it fails to anticipate, recognize, avoid, neutralize, or adapt to external or internal pressures that threaten its long-term survival. Entropy of the system

The Contingency Approach to Organizational Design
a type of organizational design that depends on the changing forces in a firm’s competitive environment

Today’s Organizational Design Challenges
Keeping Employees Connected Widely dispersed and mobile employees Building a Learning Organization Managing Global Structural Issues Cultural implications of design elements

HISTORICAL OPINIONS ABOUT ORGANIZATIONAL EFFECTIVENESS
FREDERICK TAYLOR HENRI FAYOL ELTON MAYO

MINIMALIZATION, TECHNOLOGICAL EXCELLENCE, Etc.
FREDERICK TAYLOR EFFECTIVENESS WAS DETERMINED BY FACTORS SUCH AS PRODUCTION MAXIMIZATION, COST MINIMALIZATION, TECHNOLOGICAL EXCELLENCE, Etc.

HENRI FAYOL EFFECTIVENESS IS A FUNCTION OF CLEAR
AUTHORITY AND DISCIPLINE WITHIN AN ORGANIZATION

ELTON MAYO EFFECTIVENESS IS A FUNCTION OF PRODUCTIVITY RESULTING FROM
EMPLOYEE SATISFACTION

ORGANIZATIONAL EFFECTIVENESS
MEETING ORGANIZATIONAL OBJECTIVES AND PRVAILING SOCIETAL EXPECTATIONS IN THE NEAR FUTURE, ADAPTING AND DEVELOPING IN THE INTERMEDIATE FUTURE, AND SURVIVING IN THE DISTANT FUTURE.

APPROACHES TO MEASURING ORGANIZATIONAL EFFECTIVENESS
Goal Approach: Effectiveness is the ability to excel at one or more output goals. Internal Process Approach: Effectiveness is the ability to excel at internal efficiency, coordination, motivation, and employee satisfaction. System Resource Approach: Effectiveness is the ability to acquire scarce and valued resources from the environment.

Approaches to Measuring Org. Effectiveness, continued
Constituency Approach: Effectiveness is the ability to satisfy multiple strategic constituencies both within and outside the organization. Domain Approach: Effectiveness is the ability to excel in one or more among several domains as selected by senior managers.

Flow Charts of Approaches to Organizational Effectiveness – Goal Approach
INPUTS TRANSFORMATION OUTPUTS GOAL APPROACH

Flow Charts of Approaches to Organizational Effectiveness – Internal Process Approach
INPUTS TRANSFORMATION OUTPUTS INTERNAL PROCESS APPROACH

Flow Charts of Approaches to Organizational Effectiveness – System Resource Approach
INPUTS TRANSFORMATION OUTPUTS SYSTEM RESOURCE APPROACH

Flow Charts of Approaches to Organizational Effectiveness – Constituency Approach
INPUTS OUTPUTS TRANSFORMATION STRATEGIC CONSTITUENCIES APPROACH

Terms to Know organizing organizational structure
organizational design work specialization departmentalization functional departmentalization product departmentalization geographical departmentalization process departmentalization customer departmentalization cross-functional teams chain of command authority responsibility unity of command span of control centralization decentralization employee empowerment formalization mechanistic organization organic organization unit production mass production process production simple structure functional structure

Terms to Know divisional structure team structure matrix structure
project structure boundaryless organization virtual organization network organization learning organization organizational chart

Organization structure

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