Organizational Behavior

Dr. Tripti Desai

Organization Structure
Studied By:-

Parth Pradhan Mohit Kukreja Saikat Chaterjee Anil Kushwaha Manasvi Baweja Ramandeep Kapoor

Organization:
Group of people united for common purpose. Business unit for utilization of resources to create a result. Activities such as task allocation, coordination and supervision. Process in which employees, facilities and tasks are related to each other to achieve specific goals.

Organization Structure:
Determined by managerial decisions. Co-ordinates and controls the jobs in an organization. It is a linking process including authority relationships and communication networks in addition to specific planning and controlling techniques. Finally it results in creation of a superstructure with in which the organizational work takes place.

Why Organization Structure?

All businesses have to organise what they do. A clear structure makes it easier to see which part of the business does what. Needed for maximum efficiency. Establishes formal lines of authority. Clusters jobs into units. For dividing work to be done into specific jobs and departments.

Classical Theory:
Proposed by Taylor, Fayol and Weber.

Top Management

Middle Management

Supervisory Management

Pyramid Structure

Hierarchy Specialization/Division of Labour Scalar Principle Unity of Command

Design

Departmentalization Span of Control Authority and Responsibility Centralization and Decentralization Formalization

1-Hierarchy:
Heart of a formal structure is the job-task-pyramid. Organization work is sliced from top to bottom. Authority and responsibilities are allocated by delegation from top to successively lower levels. Number of levels may vary with organizations. Each successive lower level represents a decreasing scope and lower level of authority.

2-Specialization:
Specialization promises for a greater efficiency and productivity. Division of labour allows a worker to perform a manageable number of work. Less time needed for learning, increase in proficiency, organization can hire and pay for a person who has the exact required skill. However, division of labour forces to utilize a narrow brand of worker personality and the worker also looses interest by doing the same kind of work.

3-Departmentation:
Its a way of dividing the large and complex organization into smaller, flexible units. Grouping of activities and employees into departments. It is designed to take advantage of division of labour.

Base for Departmentation

Functional

Product

Product

Process

Geographical

A- Functional Departmentation: Departmentation:

Grouping jobs by functions performed.
Plant Manager
Manager Engineering Manager Manager Accounting Manufacturing Manager HR Manager Purchasing

+ Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations. + Coordination within functional area. + In-depth specialization. Poor communication across functional areas. Limited view of organizational goals.

B- Product Departmentation: Departmentation:

Grouping jobs by product line.

+ + +

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.

C-Geographical Departmentation: Departmentation:

Grouping jobs on the basis of territory or geography.
Vice President for Sales Sales Director, Sales Director, Sales Director, Central Region Sales Director, Eastern Region

Western Region Southern Region

+ More effective and efficient handling of specific regional issues that arise. + Serve needs of unique geographic markets better. Duplication of functions. Can feel isolated from other organizational areas.

D- Process Departmentation: Departmentation:

Grouping jobs on the basis of product or customer flow.
Plant Superintendent

Designing Department Manager Sourcing Department Manager

Cutting Department Manager Stitching Department Manager

Finishing Department Manager Inspection, Shipping Department Manager

+ More efficient flow of work activities. Can only be used with certain types of products.

E- Customer Departmentation: Departmentation:

Grouping jobs by type of customer and needs.
Director Sales

Manager Retail Accounts

Manager Sales Accounts

Manager Government Accounts

+ Customers needs and problems can be met by specialists. Duplication of functions. Limited view of organizational goals.

4- Unity of Command:
No man can serve two masters well Each subordinate is accountable to only one superior. Source of command is unified. Subordinates are placed under the guidance, control and supervision of one superior. Conflicting orders and demands can be avoided.

5- Span of Control:
Limited number of subordinates under a manager. No single executive should have more people looking to him for guidance and leadership. A narrow span produces a tall organizational pyramid which is less complex. However both tall and flat structures have their own supporters and critics.

Contrasting Spans of Control

Members at each level Levels 1 2 3 4 5 6 Span of 4 1 4 16 64 256 1024 4096 Span of 8 1 8 64 512 4096

Employees=4096 Managers =1365

Employees=4096 Managers =585

6- Authority and Responsibility:

Right to give orders and power to get obedience. Delegation of Authority:- An authorization to a subordinate manager to act in a certain manner independently. Centralization and Decentralization of Authority: Managers allow subordinates to take decisions independently at various matters.

7- Scalar Chain:
Chain of superiors ranging from the ultimate authority to the lowest ranks. Refers to an interconnected and unbroken set of reporting relationships extending from top to bottom. Each manager is superior to a manager below him. Short-circuiting the chain of command is not advisable and should be avoided.

8- 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.

Challenges to Classical Theory:

Classical theory did not work in all situations. Failed to produce results in complex organizations. Failed to produce any benefits in real practice. Bureaucracy was the epitome of inefficiency.


Bottom-up Authority Open System Theory

Classical Vs Modern Theory:

Classical system } Stable environment } Division of labour } Authority } Command to exact obedience } One-way communication } Emphasis on positions } Autocratic approach
} Closed } Open

Modern system } Dynamic environment } Job enlargement } Consensus } Participation to achieve target } Open/multidirectional communication } Emphasis on goals } Democratic approach

Contingency Theory:
No best way in which to organize. No one pattern of organization style that is universally appropriate. Design is conditional.
Forces in Manager (Strategy)

Forces in the Task

Forces in the Subordinates

Forces in the Environment

1-Strategy and Structure:

Refers to long-term decisions adopted by managers to achieve organizational goals. Strategy is developed by careful analysis of opportunities, strengths and weaknesses in the organization. Managers decide initially to enter in which organization, location, how to compete, kind of organization, who will be the top manager, etc.

2-Size and Structure:

Size determines the structure. As the number of sub-units increases, more levels are created in the hierarchy. Large organizations have more complex structure than small ones. Large organizations tend to be more decentralized. Large organizations are less organic and more bureaucratic.

3-Technology and Structure:

Organizations adapt their structures to their technology Joan 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

4-Environment 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.

Common Organizational Designs:

} 1-

The Project Structure

} 2-

The Matrix Structure

} 3-

The Network Structure