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CHAPTER 3 BEYOND ORGANIZATIONAL

STRUCTURES

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Introduction Organization structure determines who

works togetherIt is the way managers design their firms to

achieve their organization’s mission and goalsOrganizational communication flows

through its structure, which affects:behaviorhuman relationsperformance

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The transition from an economy based on materials to an economy based on flows of

information has created considerable challenges for organizational structure, and

communication.

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Principles of Organization (1 of 3)

1. Principle of Objective - Objective of Org as an Entity – Objective of Each of its Subsidiaries – Objective of Each of its departments –

2. Unity of Actions – All efforts should be coordinated towards the

objective of the org3. Division of Work –

Division of labor, or work specialization – refers to the degree to which tasks are subdivided into separate jobs

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Principles of Organization (1 of 3)

4 . Principle of Authority – Necessary authority to control the activites of

various departments should be delegated properly. Defined, Precise and Accurate

5. Principle of Responsibility— Where there is Authority responsibility should

also be assigned6. Principle of Unity of Command –

Chain of command and reporting should be clear and precise.

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Principles of Organization (2 of 3)

7. Span of Managementrefers to number of employees reporting to a

manager8. Principle of Flexibility

Structure should be flexible to adapt to changes9. Principle of Balance –

Structure should balance all activities and prev principles.

10. Development of Personal Ability –Sufficient scope for people to grow

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Principles of Organization (3 of 3)

11. Principle of Communication --Effective Communication system should be there

for proper functioning of org.

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Creating an organization

Divisional Territory Matrix

Product Customer

Consideration Of

Objective

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Formal Organization Structure

President

Vice PresidentProduction

Vice PresidentFinance

Vice PresidentMarketing

ManagerA

ManagerB

ManagerC

ManagerD

ManagerE

ManagerF

ManagerG

ManagerH

ManagerI

Vertical downward communication

Vertical upward communication

Exhibit 6.2

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Informal Organization Structure

President

Vice PresidentProduction

Vice PresidentFinance

Vice PresidentMarketing

ManagerA

ManagerB

ManagerC

ManagerD

ManagerE

ManagerF

ManagerG

ManagerH

Horizontal communication

networks

Exhibit 6.2

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Contemporary Organization Design

VirtualOrganizations

BoundarylessOrganizations

E-Organizations

LearningOrganizations

Team Organizationsand

Reengineering

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Organizational Communication Organizational communication – the

compounded interpersonal communication process across an organization

Communication flows in an organization are:VerticalHorizontal

Grapevine (multidirectional)

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Vertical and Horizontal Communication

Vertical CommunicationThe flow of information

both up and down the chain of command

Formal communicationRecognized as officialStatus and power are not

equal among participants in vertical communication

Horizontal Communication

• The flow of information between colleagues and peers

• Informal communication

• Does not follow the chain of command

• Not recognized as official

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Grapevine Communication Grapevine – the informal vehicle through

which messages flow throughout the organization

“When the grapevine allows employees to know about a management decision almost before it is made, management must be doing something right.”

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Communication Networks Communication networks – sets of

employees who have stable contact through which information is generated and transmitted

Two major types of communication networks: 1. within organizations 2. within departments and small groups

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Message Transmission Channels

Oral Communication

Written Communication

Nonverbal Communication

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Oral Communication Media

Face-to-Face Telephone

Meetings Presentations

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Written Communication (1 of 2)

With increased use of e-mail, managers substitute face-to-face communication with e-mail

Communication Objective GuidelinesMemosLettersReportsBulletin board noticesPostersComputers/e-mailFax

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Written Communication (2 of 2)

Writing skills Grammar – rules for use of the eight parts

of speech To simplify grammar, we use subjects,

predicates, modifiers, and connectives

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Nonverbal Communication

FacialExpressions

VocalQualities

Gestures Posture

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Span of Control

Definition It is the number of subordinates a

manager can direct efficiently and effectively.

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Factors (span of Management) Ability of Manager Nature and importance of Job Communication Network The complexity of tasks The physical proximity of employees The degree of standardization of work procedures The strength of the organization’s value system The sophistication of the organization’s MIS The preferred managing style of managers

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Recent Trends (Span of Management)

Increasing Decentralization Increasing Size of Org Requirement of efficient and quick decision

making Advancement in communication technology Wider span of management

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Authority and Responsibility Definition Line authority and staff authority How do authority and power differ? The types of power

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Authority: It is the rights inherent in a managerial position

to give orders and expect subordinates to be obeyed.

Responsibility: It is an obligation to perform assigned activities. Power: It is an individual’s capacity to influence

decisions.

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Line Authority and Staff Authority Line authority entitles a manger to direct the work of

an employee. A manager with line authority has the right to direct the

work of employees and to make certain decisions without consulting anyone

Staff authority is used to support, assist, and advise the holders of line authority.

Whether a manager’s function is classified as line or staff depends on the organization’s objectives.

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Exhibit6-3 Line Versus Staff Authority

Other

ExecutiveDirector

Assistant to theExecutive Director

Director of HumanResources

Director ofOperations

Director ofPurchasing

Otherdirectors

Unit 1Manager

Unit 2Manager

Humanresources Operations Purchasing Other Human

resources Operations Purchasing

Line authority

Staff authority

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The Types of Power Coercive power: power on fear. Reward power: power based on the ability to

distribute something that others value. Legitimate power: power based on one’s position

in the formal hierarchy. Expert power: power based on one’s expertise,

special skills, or knowledge. Reference power: power based on identification

with a person who has desirable resources or personal traits.

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Centralization Versus Decentralization

Centralization is a function of how much decision-making authority is pushed down to lower levels in an organization; the more centralized an organization is, the higher is the level at which decisions are made.

Decentralization refers to the pushing down of decision-making authority to lowest levels of an organization.

Centralization-decentralization is not an either-or concept. It’s a degree phenomenon.

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How to Create a Horizontal Corporation

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Centralization

Centralization Early stages of organizational growth Period of Emergency In order to provide proper integration In case where managerial talent happens to be in

short supply.

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Decentralization – Merits

Reduces problem of communication Eases burden of chief executive. It facilitates product diversification Improvement in morale and motivation Permits better quicker decision making Competitive climate in the org environment Leads to effective control

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Decentralization – Demerits

Pressure on Managers Helpless in case of emergency Creates problem of coordination

Degree of Decentralization -- History n age, Size & Type Approach of Top Management External Factors

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The Pendulum Swings In the Industrial Age, the top-down controlled

hierarchies of centralized organizations were dominant.In our Information or Knowledge Age, inspired by the decentralized structure of the Internet, a swing toward loosely connected networks or cells is becoming more common.The immediate future suggests a flood of hybrid organizations that will change our view of organizational structure and leadership. Here's some examples of each type of organization...

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Some Examples

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Centralized Spiders Dictatorship Military Government Television Typical Corporation General Motors Microsoft

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Decentralized Starfish Our Brain The Internet Alcoholics Anonymous Apache Indians Terrorist Cells Open Source Software Peer to Peer Software

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Fusion Wikipedia Craigslist Toyota Skype Ebay GE

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The Five Ways to Departmentalization

Functional departmentalization Product departmentalization Customer departmentalization Geographic departmentalization Process departmentalization

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Grounds of Departmentalization

Co-ordination (Task n process) Control (Facilitates Admin Control) Org Devlopment Autonomy Evaluation

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Basis of Departmentalization

Cost Factor Specialization Coordination Control Attention to local condition Consideration of Human Element in

relation to technical

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Dhruv Lakra and the Mirakle Courier - a tale of new India

The new generation of young entrepreneurs in India are creating new directions for business opportunities as well as social responsibility. Dhruv Lakra, an MBA graduate from Oxford startedMirakle Couriers, a courier company with a difference which employs only deaf and dumb youths. A courier service requires minimal use of speech and hearing, which is why Dhruv thought of starting this business for the specially abled people.

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Dhruv Lakra and the Mirakle Courier - a tale of new India

Barring the 4 management staff, all employees are hearing disabled. He has 2 branches in Mumbai and already plans to go pan India in the long run. In his own words Dhruv stated a moving tale of how he got this idea: "Once upon a time, Dhruv was sitting on a bus next to a young boy looking eagerly out the window. In fact he was not just eager but actually being very restless. He was looking around anxiously, seeming slightly lost.

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Dhruv Lakra and the Mirakle Courier - a tale of new India

Dhruv asked him where he was going but the boy did not respond. It took him a few seconds to realise that this boy was unable to hear or speak. He was deaf. Though the bus conductor regularly announced the stops this boy still did not know where he was. Dhruv took out a piece of paper and wrote to him in Hindi asking him where he was going. Through the back and forth pen and paper exchange, it suddenly dawned on Dhruv how difficult life was for the deaf.

  

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Dhruv Lakra and the Mirakle Courier - a tale of new India

Something as straightforward as a bus became a struggle...It is an invisible disability. You can not know when someone near you is deaf as there are no obvious physical attributes, and so its totally ignored. It is also a silent (voiceless) disability. There is very little public sympathy for the deaf, and by connection, a severe lack of government support for them in India. Particularly when it comes to employment there are no opportunities because no one has the patience or the foresight to learn deaf language and culture. This is how Mirakle Couriers was born...  

  

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Dhruv Lakra and the Mirakle Courier - a tale of new India

Over the next few months Dhruv spent time exploring the deaf culture and learning Indian Sign Language. He focused on a courier business because it requires a lot of visual skills but no verbal communication. The deaf are extremely good at maps reading, remembering roads and buildings because they are so visually inclined...Over the last two years Mirakle Couriers has grown to operate in 2 Branches in the city, employing 70 deaf employees and delivering over 65,000 shipments per month. We have won several awards including the 2009 Hellen Keller award and the 2010 National Award for the Empowerment of People With Disabilities." 

  

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Common Types of Departmentalization (2 of 4)

Functional Departmentalizationinvolves organizing departments around essential

input activities, such as:production and operationsfinance and accountingmarketing and saleshuman resources

Product (Service) Departmentalizationinvolves organizing departments around goods

and services provided

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Common Types of Departmentalization (3 of 4)

Customer Departmentalizationinvolves organizing departments around the

needs of different types of customers with unique needs calling for different sales staffs and products

Divisional Departmentalization (M-Form)the firm develops independent lines of business

that operate as separate companies, all contributing to the corporation profitability

Territory (Geographic) Departmentalizationinvolves organizing departments in each area in

which the enterprise does business

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Common Types of Departmentalization (4 of 4)

Matrix Departmentalizationcombines the functional and product

departmental structuresCombination

many large companies have more than one form of departmentalization