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Lecture 11 & 12
Organizational Structure
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Organizational structure
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Introduction $cont%• Developed in late 1th century and earlier
2'th century(• )*O placed at the top and everyone else
placed in layers do+n
•
hin-ing and decision ma-ing +as made attop and physical +or- done by employeesorganized in departments
• Such structure got popularity in pro!t, non
pro!t and military organizations• he changing environment./
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0ey *lements of OrganizationalStructure
1 or- Specialization2 Information Sharing erspective
3 Departmentalization
4 )hain of )ommand5 Span of )ontrol
6 7ormalization
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1or- Specialization
• or- specialization or division of labor thedegree to +hich activities in theorganization are subdivided into separate
8obs
•
*ssence is to divide 8ob in number of steps,each completed by a separate individual
• 9ot all employees have same level of s-ills
• It is most e:cient +ay to utilize employeess-ills and improve through repetition
• ;e
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or- Specialization $)ont%• It +as vie+ed as unending source of
increased productivity• =ut from 16's researchers started arguing
that it cause boredom, absenteeism, stress,poor llo+ing to do complete 8ob
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2 Information Sharing erspective• If the structure doesn?t !t the information re
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Aertical Information Sharing• Aertical lin-ages are used to coordinate
activities bet+een the top and bottom of anorganization and are designed primarily forcontrol of the organization
• Organization may use variety of structural devices,
such as(• Hierarchical Referral $roblem can be referred to
neCt upper level and the ans+er is passed bac- insimilar +ay%
•
Rules and plan $if problem decisions are repetitionsthen rules or procedures are established to giveemployees direction for problem solving%
• Vertical Information Systems $includes periodicreports, +ritten information, and computerbased
communications distributed to managers%
B t I t
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Bor zonta In ormat on ar ng$cont%
• It overcomes the barriers of communication
• rovides opportunities for coordination amongemployees to achieve unity of e"orts andob8ectives
• It is horizontally among departments
Information System• )omputerized information systems enable
managers or frontline +or-ers throughout theorganization to routinely eCchange information
about problems, opportunities, activities ordecisions
Direct Contact
• > higher level of horizontal lin-age is direct
contact among employees +ho are a"ected
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Borizontal Information Sharing$cont%Task orce
• If the problem is among various departmentsthen a temporary tas- force is created to solvethe issues, +hich is usually disbanded after thetas- accomplishment It is composed of
representative from various departments +ho areinvolved in the issue
ull!time Integrator• Enli-e the liaison person, the integrator does not
report to one of the functional departments beingcoordinated Be or she located outside thedepartments and has the responsibility forcoordinating several departments
B i t l I f ti Sh i
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Borizontal Information Sharing$cont%
Teams• eams tend to be the strongest horizontal lin-age
mechanism
• eams are permanent tas- forces and are often usedin con8unction +ith a fulltime integrator +hen
activities among departments re virtual team is one that is made up of
organizationally or geographically dispersedmembers +ho are lin-ed primarily through advanced
information and communications technologies
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3 Departmentalization
Departmental Frouping• 7unctional grouping, divisionalgrouping, matriC grouping, horizontal
grouping, virtual net+or- grouping
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7unctional Structure• In a functional structure, activities are grouped
together by common function from the bottom tothe top of the organization
• Buman -no+ledge & s-ills +ith respect to speci!cactivities are consolidated
•
his structure is most e"ective(• hen indepth eCpertise is critical to meet
organizational goals
• hen the organization needs to be controlled and
coordinated through the vertical hierarchy, and+hen e:ciency is important
• his structure could be
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Airtual Structure
•
he most +idespread design trend in recentyears has been the outsourcing of variousparts of the organization to outside partners
• > fe+ organizations carry outsourcing to theeCtreme to create a virtual net+or-structure ith a virtual net+or- structure,sometimes called a modular structure, !rmsubcontracts most of its ma8or functions orprocesses to separate companies andcoordinates their activities from a small
head
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Bybrid Structure• @ost large organizations, in particular, often use a
hybrid structure that combines characteristics ofvarious approaches tailored to speci!c strategicneeds
• Organizations combine characteristics of functional,divisional, geographic, horizontal, or net+or-structures to ta-e advantages of strengths ofvarious structures and avoid some of the+ea-nesses
• hey o"er greater #eCibility
• One hybrid that is often used is to combine thefunctional and divisional structures
• > second hybrid approach that is increasingly usedtoday is to combine characteristics of functional,
divisional, and horizontal structures
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4 )hain of )ommand
• It deals +ith !tting the +or- activities and
departments together in the organizationalhierarchy
• It is unbro-en line of authority that eCtends fromthe top of the organization to the lo+est echelon
and clari!es +ho reports to +hom• *ach manager is given a degree of authority in
order to meet hisGher responsibility
• Enity of command is given to preserve unbro-en
line of authority• Lin-s all persons on an organization and sho+s +ho
reports to +hom
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6 7ormalization
• Degree to +hich 8obs +ithin an organization
are standardized• Incumbents have minimum amount of
discretion over +hat, +hen and ho+ to do
•
*Cpected to handle same input in same +ayresulting consistent and uniform output
• *Cplicit 8ob descriptions, lots of rules,procedures
• It eliminates employee alternative behaviorengagement
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Symptoms of De!ciency•Decision ma-ing is delayed or
lac-ing in
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@echanistic & OrganicStructure
High specialization
Rigiddepartmentalizatio
nClear chain ofcommand
"arro# spans ofcontrol
Centralization
High formalization
Cross!functionalteams
Cross!hierarchical
teamsree $o# ofinformation
%ide spans of
controlDecentralization
&o# formalization