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OB Model developed by Margie Parikh
Understanding Individuals
in organisationsPerception/Attitude/Motivation/personaity
Understanding groups
in organisationsThresholds ofinterpersonbehaviour/understanding groups andteams/communication/Conflict,stress andnegotiation/decisionmaking/power andpolitics
Understanding howorganisations shape
behaviourOrganisational design/Organisationalstructure/Organisational roles/organisationalculture
Effectivenessthroughmanaging andleading humanbehaviour at
work
Individual effectiveness
Effectiveness of groupRelationships
Effectiveness ofOrganisational roles
Groupeffectiveness
Organisationaleffectiveness
Effectiveness of systems
and process Prof. Mary Bodra.
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ORGANIZATIONAL STRUCTURES
The key is to match structures to goals
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Organizational Structures
Organizational structure is the way in which
the interrelated groups of an organization are
constructed.
The main concerns are effective
communication and coordination
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Organizational Structures
Several aspects determine the organizationalstructure
DETERMINANTS OF ORGANIZATIONAL
STRUCTURE
Strategy
Technology
Size
Environment Differentiation-Integration
Power and Control-Chain and span of control
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Contingency Factors
Structural decisions are influenced by: Overall strategy of the organization
Organizational structure follows strategy.
Size of the organization
Firms change from organic to mechanistic organizationsas they grow in size.
Technology use by the organization
Firms adapt their structure to the technology they use.
Degree of environmental uncertainty Dynamic environments require organic structures;
mechanistic structures need stable environments.
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Contingency Factors
Strategy Frameworks: Innovation
Pursuing competitive advantage through meaningful and
unique innovations favors an organic structuring.
Cost minimization Focusing on tightly controlling costs requires a
mechanistic structure for the organization.
Imitation
Minimizing risks and maximizing profitability by copyingmarket leaders requires both organic and mechanistic
elements in the organizations structure.
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Contingency Factors
Strategy and Structure
Achievement of strategic goals is facilitated by changes
in organizational structure that accommodate andsupport change.
Size and Structure
As an organization grows larger, its structure tends to
change from organic to mechanistic with increased
specialization, departmentalization, centralization, andrules and regulations.
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Contingency Factors
Technology and Structure Organizations adapt their structures to their technology.
Woodwards classification of firms based on the complexity
of the technology employed:
Unit production of single units or small batches
Mass production of large batches of output
Process production in continuous process of outputs
Routine technology = mechanistic organizations
Non-routine technology = organic organizations
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Woodwards Findings on Technology, Structure,
and Effectiveness
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Contingency Factors
Environmental Uncertainty and Structure
Mechanistic organizational structures tend to be
most effective in stable and simple environments.
The flexibility of organic organizational structures
is better suited for dynamic and complex
environments.
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Strategy and Goals of Organisation
Strategy and goals are closely linked
Strategy of the firm starts with selecting some
goals over others
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What is Strategy ?
Strategy is the process of positioning theorganisation in the competitive environment and
implementing actions to complete successfully
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What are the different types of
organizational goals?
Societal goals
Reflect an organizations intended contributions to the
broader society
By contributing to the larger society organizations gain
legitimacy-a social right to operate
By claiming to provide specific types of societalcontributions an organisation can claims over
resources, individuals, markets, and products
Example Tobacco firm(heavily taxed social contribution
highly questionable)
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What are the different types of
organizational goals? Mission statement
Often a social contribution of the firm is a part of
its mission statement A written statement of organizational purpose
A good mission statement identifies whom thefirm will serve and how it will go about
accomplishing its societal purpose A mission statement is often the first visible
outcome in developing a strategy
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What are the different types of
organizational goals? Output goals
Define the type of business the organization is
pursuing Provide some substance to the more general
aspects of mission statements
Example for a bank the out goals will be retail
banking ,commercial banking ,investmentadvisory services and electronic payment
processing
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What are the different types of
organizational goals? Systems goals
Concerned with the conditions within the organization that
are expected to increase the organizations survival
potential Typical systems goals include growth, productivity, stability,
harmony, flexibility, prestige, and human resource
maintenance
System goals provide a road map that helps them link
together various units of their organisation to assure
survival
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What are the different types of
organizational goals? Well-defined systems goals can:
Focus managers attention on what needs to be
done Provide flexibility in devising ways to meet
important targets
Be used to balance the demands, constraints, and
opportunities facing the firm Form a basis for dividing the work of the firm-
basis for developing a formal structure
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Defining Organizational
Structure Successful organizations develop a structure
consistent with the pattern of goals
established by senior management
The formal structure shows the planned
configuration of positions, job duties, and the
lines of authority among different parts of theorganization
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Defining Organizational Structure
Organizational Structure
The formal arrangement of jobs within anorganization.
Organizational Design
A process involving decisions about six key elements: Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization
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Organizational Structure Work Specialization
The degree to which tasks in the organization aredivided into separate jobs with each step completedby a different person.
Overspecialization can result in humandiseconomies from boredom, fatigue, stress, poorquality, increased absenteeism, and higher turnover.
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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
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Exhibit 102 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
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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
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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
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Process Departmentalization
+ More efficient flow of work activities
Can only be used with certain types of products
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Customer Departmentalization
+ Customers needs and problems can be met by specialists
- Duplication of functions
- Limited view of organizational goals
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Organization Structure
Chain of command A listing of who reports to whom up and down the
organization
Unity of command Each person has only one boss and each unit one
leader
Span of control The number individuals reporting to a supervisor
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Organization Structure
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
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Exhibit 103 Contrasting Spans of Control
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Organization Structure
Centralization The degree to which decision-making is concentrated at a
single point in the organizations.
Organizations in which top managers make all the
decisions and lower-level employees simply carry out
those orders.
Decentralization
Organizations in which decision-making is pushed down to
the managers who are closest to the action.
Employee Empowerment Increasing the decision-making authority (power) of
employees.
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Factors that Influence the Amount of Centralization
More CentralizationMore Centralization
Environment is stable.Environment is stable.
LowerLower--level managers are not as capable or experienced atlevel managers are not as capable or experienced atmaking decisions as uppermaking decisions as upper--level managers.level managers.
LowerLower--level managers do not want to have a say in decisions.level managers do not want to have a say in decisions. Decisions are relatively minor.Decisions are relatively minor.
Organization is facing a crisis or the risk of company failure.Organization is facing a crisis or the risk of company failure.
Company is large.Company is large.
Effective implementation of company strategies depends onEffective implementation of company strategies depends onmanagers retaining say over what happens.managers retaining say over what happens.
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Factors that Influence the Amount of Centralization
More DecentralizationMore Decentralization
Environment is complex, uncertain.Environment is complex, uncertain.
LowerLower--level managers are capable and experienced at makinglevel managers are capable and experienced at makingdecisions.decisions.
LowerLower--level managers want a voice in decisions.level managers want a voice in decisions.
Decisions are significant.Decisions are significant.
Corporate culture is open to allowing managers to have a say inCorporate culture is open to allowing managers to have a say inwhat happens.what happens.
Company is geographically dispersed.Company is geographically dispersed.
Effective implementation of company strategies depends onEffective implementation of company strategies depends onmanagers having involvement and flexibility to make decisions.managers having involvement and flexibility to make decisions.
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Benefits of decentralization
Higher subordinate satisfaction
Quicker response to a series of unrelatedproblems
Assists in on-the-job training of subordinates for
higher-level positions
Encourages participation in decision making
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Formalization
The written documentation of policies, procedures, and
rules to guide behavior and decision making
Standardization
The degree to which the range of allowable actions in a
job or series of jobs is limited so that actions areperformed in a uniform manner
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What are bureaucracies and what
are the common forms? Bureaucracy
Form of organization that emphasizes legal
authority, logic, and order
Relies on a division of labor, hierarchical control,promotion by merit with career opportunities for
employees, and administration by rule
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What are bureaucracies and what
are the common forms? Mechanistic type
Emphasizes vertical specialization and control
Stresses rules, policies, and procedures; specifiestechniques for decision making; and use well-documented control systems
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What are bureaucracies and what
are the common forms? Benefits of the mechanistic type
Efficiency.
Limitations of the mechanistic type Employees dislike rigid designs, which makes work
motivation problematic
Unions may further solidify rigid designs.
Key employees may leave
Hinders organizations capacity to adjust to subtle
environmental changes or new technologies
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What are bureaucracies and what
are the common forms? Organic type
Emphasizes horizontal specialization
Procedures are minimal, and those that do existare not highly formalized
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What are bureaucracies and what
are the common forms? Benefits of the organic type
Good for problem solving and serving individual
customer needs
Centralized direction by senior management isless intense
Good at detecting external changes and adjustingto new technologies
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What are bureaucracies and what
are the common forms? Limitations of the organic type
Less efficient than mechanistic type
Restricted capacity to respond to centralmanagement direction
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Organizational Design
Decisions Mechanistic Organization
A rigid and tightly controlled
structure
High specialization
Rigid departmentalization
Narrow spans of control
High formalization
Limited information network
(downward) Low decision participation
Organic Organization
Highly flexible and adaptablestructure
Non-standardized jobs Fluid team-based structure
Little direct supervision
Minimal formal rules
Open communication network
Empowered employees
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Mechanistic versus Organic Organization
High specialization
Rigid departmentalization
Clear chain of command
Narrow spans of control
Centralization
High formalization
Cross-functional teams
Cross-hierarchical teams
Free flow of information
Wide spans of control
Decentralization
Low formalization
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Divisional departments
individual and departments are grouped by
products, territories, services, clients, or legalentities
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Matrix departmentation
uses both the functional and divisional forms
simultaneously
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What are the hierarchical
attributes of organizations? Control
The set of mechanisms used to keep actions or
outputs within predetermined limits
Deals with:
Setting standards
Measuring results against standards
Instituting corrective action
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What are the hierarchical
attributes of organizations? Output controls
Focus on desired targets and allow managers to
use their own methods to reach defined targets
Part of overall method of managing by exception
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What are the hierarchical
attributes of organizations? Process controls
Attempt to specify the manner in which tasks are
accomplished
Types of process controls
Policies, procedures, and rules
Formalization and standardization
Total quality management controls
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What are the hierarchical
attributes of organizations? Policy
Guideline for action that outlines important
objectives and broadly indicates how activities areto be carried out
Procedures
Indicate the best method for performing a task,
show which aspects of a task are most important,or outline how an individual is to be rewarded
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What are the hierarchical
attributes of organizations? Rules
Describe in detail how a task or a series of tasks is
to be performed, or indicate what cannot be done
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What are the hierarchical
attributes of organizations? Total Quality Management
process approach to continual improvement
based on statistical analyses of the firmsoperations
Late W.Edwards Demings modern day founder of
the TQM movement
Demings 14 points
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Strengths and Weaknesses of Traditional
Organizational Designs
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How is work organized and
coordinated? Coordination
The set of mechanisms that an organization uses
to link the actions of its units into a consistentpattern
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How is work organized and
coordinated? Personal methods of coordination
Produce synergy by promoting dialogue,
discussion, innovation, creativity, and learning,both within and across units
Common personal methods of coordination are
direct contact between and among organizational
members and committee memberships
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How is work organized and
coordinated? Impersonal methods of coordination
Produce synergy by stressing consistency and
standardization so that individual pieces fittogether
Contemporary use of matrix departmentation and
management information systems for
coordination
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Contemporary Organizational Designs
Team StructureTeam Structure
What it is:What it is: A structure in which the entire organization is made up ofA structure in which the entire organization is made up ofwork groups or teams.work groups or teams.
Advantages:Advantages: Employees are more involved and empowered. ReducedEmployees are more involved and empowered. Reducedbarriers among functional areas.barriers among functional areas.
Disadvantages:Disadvantages: No clear chain of command. Pressure on teams to perform.No clear chain of command. Pressure on teams to perform.
MatrixMatrix--Project StructureProject Structure
What it is:What it is: A structure that assigns specialists from different functionalA structure that assigns specialists from different functionalareas to work on projects but who return to their areas whenareas to work on projects but who return to their areas whenthe project is completed. Project is a structure in whichthe project is completed. Project is a structure in whichemployees continuously work on projects. As one project isemployees continuously work on projects. As one project iscompleted, employees move on to the next project.completed, employees move on to the next project.
Advantages:Advantages: Fluid and flexible design that can respond to environmentalFluid and flexible design that can respond to environmentalchanges. Faster decision making.changes. Faster decision making.
Disadvantages:Disadvantages: Complexity of assigning people to projects. Task andComplexity of assigning people to projects. Task andpersonality conflicts.personality conflicts.
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(contd) Contemporary Organizational Designs
Boundaryless StructureBoundaryless Structure
What it is:What it is: A structure that is not defined by or limited to artificialA structure that is not defined by or limited to artificialhorizontal, vertical, or external boundaries; includes virtualhorizontal, vertical, or external boundaries; includes virtualand network types of organizations.and network types of organizations.
Advantages:Advantages: Highly flexible and responsive. Draws on talent wherever it sHighly flexible and responsive. Draws on talent wherever it sfound..found..
Disadvantages:Disadvantages: Lack of control. Communication difficulties..Lack of control. Communication difficulties..
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New Design options
Contemporary Organizational Designs Team structures
The entire organization is made up of work groups or self-managed teams of empowered employees.
Matrix and project structures
Specialists from different functional departments areassigned to work on projects led by project managers.
Matrix and project participants have two managers.
In project structures, employees work continuously onprojects; moving on to another project as each project iscompleted.
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Organizational Designs Contemporary Organizational Designs (contd)
Boundaryless Organization
An flexible and unstructured organizational design that is intended to
break down external barriers between the organization and its
customers and suppliers.
Removes internal (horizontal) boundaries:
- Eliminates the chain of command
- Has limitless spans of control
- Uses empowered teams rather than departments
Eliminates external boundaries:
- Uses virtual, network, and modular organizational structuresto get closer to stakeholders.
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Removing External Boundaries
Virtual Organization
An organization that consists of a small core of full-time
employees and that temporarily hires specialists to work on
opportunities that arise. Network Organization
A small core organization that outsources its major business
functions (e.g., manufacturing) in order to concentrate what it
does best.
Modular Organization
A manufacturing organization that uses outside suppliers toprovide product components for its final assembly operations.
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Todays Organizational Design
Challenges Keeping Employees Connected
Widely dispersed and mobile employees
Building a Learning Organization
Managing Global Structural Issues
Cultural implications of design elements
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Organizational Designs
The Learning Organization
An organization that has developed the capacity tocontinuously learn, adapt, and change through the
practice of knowledge management by employees.
Characteristics of a learning organization:
An open team-based organization design that empowersemployees
Extensive and open information sharing
Leadership that provides a shared vision of the
organizations future, support and encouragement
A strong culture of shared values, trust, openness, and a
sense of community.
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Common types of hybrid structures
Divisional firm
Composed of quasi-independent divisions so that
different divisions can be more or less organic or
mechanistic
Conglomerate
A single corporation that contains a number of
unrelated businesses
Prof Mary Bodra