Description
It covers the organizational structure in detail.Horizantal Organizational structure and vertical strucure.
ORGANIZATION STRUCTURE
Organizational structure designates formal reporting relationship
including the number of levels in the hierarchy and the span of
control of managers and supervisors.
Organizational structure identifies the grouping together of
individuals into departments and of departments into the total
organization.
Organizational structure includes the design of systems to ensure
effective communication, coordination and integration of effort across the departments.
Specialization
Division of labour high low
Basis
Departmentalization high low
Number
Span of control high low
Delegation
Authority high low
Vertical structure is dominant ?Specialized tasks
?Strict hierarchy, many rules
?Vertical communication ?Few teams, task forces ?Centralized decision- making
Horizontal structure is dominant ?Shared tasks, empowerment ?Relaxed hierarchy ?Horizontal communication, face-to-face ?Many teams and task forces ?Decentralized decision-making
Information Processing Perspective on Structure
Vertical Information Linkages:
They are used to coordinate activities between the top and bottom
of an organization and are designed primarily for control of the
organization. Structural devices used to achieve vertical linkages
are:
?Hierarchical Referral
?Rules and Plans
?Vertical Information Systems
Horizontal Information Linkages: It refers to the amount of communication and coordination
horizontally across organizational departments. The structural alternatives used are ?Information system ?Direct Contact ?Task Forces ?Full time Integrator ?Teams
Organizational Design Alternatives ?Required Work Activities ?Reporting Relationships (chain of command) ?Departmental Grouping Options
oFunctional Grouping
oDivisional Grouping
oMulti-focused Grouping
oHorizontal Grouping
oModular Grouping
Functional grouping and Divisional grouping are the two most common approaches to structural design.
Functional Structure: In this structure activities are grouped
together by common function from top to the bottom of the
organization. All engineers are located in the engineering
department and the vice president of engineering is responsible
for all engineering activities. Specific knowledge and skills are
consolidated providing valuable depth of knowledge for the
organization.
Strengths ?Allows economies of scale within functional departments ?Enables in depth knowledge and skill development ?Enables the organization to accomplish functional goals ?Is best with only one or a few products
Weaknesses
?Slow response to environmental changes ?Hierarchy overload ?Poor horizontal coordination
?Less innovation
?Restricts organizational goals
Divisional Structure: divisions are organized according to individual products, services, product groups, divisions, businesses or profit centers
Strengths ?Suited to fast changes ?Higher customer satisfaction ?High coordination across functions ?Large organizations with several products ?Decentralized decision making
Weaknesses ?Eliminates economies of scale ?Poor coordination across product lines
?Eliminates in-depth competence and technical
Specialization ?Integration and standardization across product lines difficult
Geographical Structure: each geographic unit includes all functions required to produce and market products in that region Matrix Structure When both technical expertise and product innovation and change are important for meeting organizational goals Conditions ?Pressures exist to share scarce resources across product lines. ?The organization is medium sized and has moderate number of product lines.
?Environmental pressure exists for two or more critical outputs. such as for in-depth technical knowledge (functional structure) and frequent new products (divisional structure).balance of power and dual authority structure is needed.
?The environmental domain of the organization is both complex and uncertain. Frequent external changes and high interdependence between departments require coordination and information processing in both vertical and horizontal directions
Strengths ?Coordination necessary to achieve to meet dual demands from customers ?Flexible sharing of resources across products
?Suited to complex decisions and frequent changes in unstable environment ?Provides opportunity for both functional and product skill development
?Best in medium sized organizations with multiple products.
Weaknesses
?Dual authority can be frustrating and confusing ? Good interpersonal skills and extensive training ?Time consuming, frequent meetings and conflict resolution
?Collegial rather than vertical relationships required
?Great effort to maintain power balance
Horizontal structure ?Structure is created around cross-functional core processes rather than tasks, functions or geography ?Self directed teams not individuals are the basis of organizational design and performance ?Process owner have the responsibility for each core process in its entirety
?Team members are cross- trained
?Teams are empowered to think creatively ?Effectiveness is measured by end of process performance objectives (bringing value to the customers) customer satisfaction, employee satisfaction and financial contribution ?Culture is of openness, trust, collaboration focused on continuous improvement.
Strengths
?Promotes flexibility and rapid response to changes in customer needs. ?Each employee has a broader view of organizational goals ?promotes a focus on teamwork and collaboration
?Improves quality of life by offering them the opportunity to share responsibility, make decisions and be accountable for outcomes . ?Directs the attention of everyone toward the production and delivery of value to the customer. Weaknesses ?Determining the core processes is difficult and time consuming ?Requires changes in culture, job design, management philosophy and information and reward systems
?Traditional managers may not be comfortable when they have to give up power
?Can limit in depth skill development
?Significant training required for employees to work effectively in
a horizontal team environment Modular Structure
The firm subcontracts many or most of its major processes to
separate companies and coordinates their activities from small
head quarters organization.
Strengths
?Small organizations obtain talent and resources world wide.
?Reduces administrative overhead costs
?Companies can reach higher scales without huge investments in factories ,equipment or distribution facilities
Weaknesses ?No direct control over many activities ?Manage relationships and conflicts with contract partners ?Risk of organizational failure if partner fails to deliver ?Employee loyalty weak
Hybrid Structure ?It combines characteristics of various approaches tailored to specific strategic needs. ? It is often used in rapidly changing environments because they offer the organization greater flexibility Structural Alignment ?Right balance has to be between vertical control and horizontal coordination.
?Vertical control is associated with goals of efficiency and stability while horizontal coordination is associated with learning, innovation and flexibility
Structural Deficiency ?Decision making is delayed or lacking in quality ?Organization does not respond innovatively to the changing environment ?Too much conflict is evident
doc_970093431.ppt
It covers the organizational structure in detail.Horizantal Organizational structure and vertical strucure.
ORGANIZATION STRUCTURE
Organizational structure designates formal reporting relationship
including the number of levels in the hierarchy and the span of
control of managers and supervisors.
Organizational structure identifies the grouping together of
individuals into departments and of departments into the total
organization.
Organizational structure includes the design of systems to ensure
effective communication, coordination and integration of effort across the departments.
Specialization
Division of labour high low
Basis
Departmentalization high low
Number
Span of control high low
Delegation
Authority high low
Vertical structure is dominant ?Specialized tasks
?Strict hierarchy, many rules
?Vertical communication ?Few teams, task forces ?Centralized decision- making
Horizontal structure is dominant ?Shared tasks, empowerment ?Relaxed hierarchy ?Horizontal communication, face-to-face ?Many teams and task forces ?Decentralized decision-making
Information Processing Perspective on Structure
Vertical Information Linkages:
They are used to coordinate activities between the top and bottom
of an organization and are designed primarily for control of the
organization. Structural devices used to achieve vertical linkages
are:
?Hierarchical Referral
?Rules and Plans
?Vertical Information Systems
Horizontal Information Linkages: It refers to the amount of communication and coordination
horizontally across organizational departments. The structural alternatives used are ?Information system ?Direct Contact ?Task Forces ?Full time Integrator ?Teams
Organizational Design Alternatives ?Required Work Activities ?Reporting Relationships (chain of command) ?Departmental Grouping Options
oFunctional Grouping
oDivisional Grouping
oMulti-focused Grouping
oHorizontal Grouping
oModular Grouping
Functional grouping and Divisional grouping are the two most common approaches to structural design.
Functional Structure: In this structure activities are grouped
together by common function from top to the bottom of the
organization. All engineers are located in the engineering
department and the vice president of engineering is responsible
for all engineering activities. Specific knowledge and skills are
consolidated providing valuable depth of knowledge for the
organization.
Strengths ?Allows economies of scale within functional departments ?Enables in depth knowledge and skill development ?Enables the organization to accomplish functional goals ?Is best with only one or a few products
Weaknesses
?Slow response to environmental changes ?Hierarchy overload ?Poor horizontal coordination
?Less innovation
?Restricts organizational goals
Divisional Structure: divisions are organized according to individual products, services, product groups, divisions, businesses or profit centers
Strengths ?Suited to fast changes ?Higher customer satisfaction ?High coordination across functions ?Large organizations with several products ?Decentralized decision making
Weaknesses ?Eliminates economies of scale ?Poor coordination across product lines
?Eliminates in-depth competence and technical
Specialization ?Integration and standardization across product lines difficult
Geographical Structure: each geographic unit includes all functions required to produce and market products in that region Matrix Structure When both technical expertise and product innovation and change are important for meeting organizational goals Conditions ?Pressures exist to share scarce resources across product lines. ?The organization is medium sized and has moderate number of product lines.
?Environmental pressure exists for two or more critical outputs. such as for in-depth technical knowledge (functional structure) and frequent new products (divisional structure).balance of power and dual authority structure is needed.
?The environmental domain of the organization is both complex and uncertain. Frequent external changes and high interdependence between departments require coordination and information processing in both vertical and horizontal directions
Strengths ?Coordination necessary to achieve to meet dual demands from customers ?Flexible sharing of resources across products
?Suited to complex decisions and frequent changes in unstable environment ?Provides opportunity for both functional and product skill development
?Best in medium sized organizations with multiple products.
Weaknesses
?Dual authority can be frustrating and confusing ? Good interpersonal skills and extensive training ?Time consuming, frequent meetings and conflict resolution
?Collegial rather than vertical relationships required
?Great effort to maintain power balance
Horizontal structure ?Structure is created around cross-functional core processes rather than tasks, functions or geography ?Self directed teams not individuals are the basis of organizational design and performance ?Process owner have the responsibility for each core process in its entirety
?Team members are cross- trained
?Teams are empowered to think creatively ?Effectiveness is measured by end of process performance objectives (bringing value to the customers) customer satisfaction, employee satisfaction and financial contribution ?Culture is of openness, trust, collaboration focused on continuous improvement.
Strengths
?Promotes flexibility and rapid response to changes in customer needs. ?Each employee has a broader view of organizational goals ?promotes a focus on teamwork and collaboration
?Improves quality of life by offering them the opportunity to share responsibility, make decisions and be accountable for outcomes . ?Directs the attention of everyone toward the production and delivery of value to the customer. Weaknesses ?Determining the core processes is difficult and time consuming ?Requires changes in culture, job design, management philosophy and information and reward systems
?Traditional managers may not be comfortable when they have to give up power
?Can limit in depth skill development
?Significant training required for employees to work effectively in
a horizontal team environment Modular Structure
The firm subcontracts many or most of its major processes to
separate companies and coordinates their activities from small
head quarters organization.
Strengths
?Small organizations obtain talent and resources world wide.
?Reduces administrative overhead costs
?Companies can reach higher scales without huge investments in factories ,equipment or distribution facilities
Weaknesses ?No direct control over many activities ?Manage relationships and conflicts with contract partners ?Risk of organizational failure if partner fails to deliver ?Employee loyalty weak
Hybrid Structure ?It combines characteristics of various approaches tailored to specific strategic needs. ? It is often used in rapidly changing environments because they offer the organization greater flexibility Structural Alignment ?Right balance has to be between vertical control and horizontal coordination.
?Vertical control is associated with goals of efficiency and stability while horizontal coordination is associated with learning, innovation and flexibility
Structural Deficiency ?Decision making is delayed or lacking in quality ?Organization does not respond innovatively to the changing environment ?Too much conflict is evident
doc_970093431.ppt