DESIGNING ORGANIZATIONAL STRUCTURE
NEED to Designe Organization
Divides work to be done into specific jobs and departments.
Assigns tasks and responsibilities associated with individual jobs.
Coordinates diverse organizational tasks.
Clusters jobs into units.
Establishes relationships among individuals,groups & departments.
Establishes formal lines of authority.
Allocates and develops organizational resources.
Organizational structure is the formal arrangement of jobs within an organization.
Organizations are designed to divide work among staff,assign their duties,give authority to them and to ellocates resources.
Some purposes of Organizing are:-
When managers create organizational design,they go through six key elements:-
3.Chain of Command
4.Span of Control
Dividing work activities into separate job tasks.
Individual employees "specialize" in doing part of an activity rather than the entire activity.
Division of labour to increase work output.
Skilled workers are assigned to do specific jobs.
It increases productivity.
-In McDonald's,one person takes order,other cook and assemble the food,another works the fryer,another gets the drink and last one serves the food.
Departmentalization involves the dividing of an organization into different departments, which perform tasks according to the departments' specializations in the organization. Departmentalization as a means of structuring an organization can be found in both public and private organizations.
Five common forms of departmentalization are:-
Grouping activities by functions performed. Activities can be grouped according to function (work being done) to pursue economies of scale by placing employees with shared skills and knowledge into departments for example human resources etc.
+Coordination within functional area
-Poor communication across functional areas
-limited view of organizational goals
Grouping activities on the basis of territory. If an organization's customers are geographically dispersed, it can group jobs based on geography.
+Effective and efficient handling of regional issues
+Better geographic market
-Duplication of functions
-Feel isolated from other areas
Grouping activities by product line. Tasks can also be grouped according to a specific product or service, thus placing all activities related to the product or the service under one manager. Each major product area in the corporation is under the authority of a senior manager who is specialist in, and is responsible for, everything related to the product line.
+Allows specialization in particular services
+Closer to customers
-Duplication of functions
-Limited view of organizational goals
Grouping activities on the basis of product or service or customer flow. Because each process requires different skills, process departmentalization allows homogenous activities to be categorized.
+More efficient flow of work activities
-Can only be used with certain types of products
Grouping activities on the basis of common customers or types of customers. Jobs may be grouped according to the type of customer served by the organization. The assumption is that customers in each department have a common set of problems and needs that can best be met by specialists.
+Customers needs & problems can be met by specialists
-Limited view of organizational goals
Chain of Command
The order in which authority and power in an organization is wielded and delegated from top management to every employee at every level of the organization. Instructions flow downward along the chain of command and accountability flows upward.
To understand chain of command we have to understand three other important concepts:-
Unity of command
Authority refers to the rights inherent in a managerial positions to tell people what to do and to expect them to do it.Managers in the chain of command had authority to do their job of coordinating and overseeing the work of others.
Early management writer,Chester Barnard proposed perspective on authority.This view called the acceptance theory of authority.
According to barnard view,subordinates will accept orders only if the following conditions are satisfied:
They understand the order.
They feel the order is consistent with the organization's purpose.
The order does not conflict eith their personal beliefs.
They are able to perform the task as directed.
The early management writers also distinguished between two forms of authority:
When managers use their authority to assign work to employees,those employees take on an obligation to perform those assigned duties.This obligation or expectation to perform is known as responsibility.
3.UNITY OF COMMAND
Unity of command principle states that percon should report to only one manager.Multiple bosses may create problem.
Span of Control
Higher average span of control means fewer layers of management within the organization and a relatively flatter organizational structure. This can lead to:
Faster decision-making due to fewer levels of approvals.
Allows the company to respond more quickly to business issues.
Better and more frequent communication between higher-level managers and staffers.
Lower average span of control means relatively more layers of management within the organization. This can lead to:
Fewer opportunities for promotions, since there are fewer management positions in the company.
The concern that manager input will be relatively harder for staffers to obtain, and managers will have less time to focus on specific decisions.
Span of control is simply the number of staff that report to a manager. Some companies also have an ideal span of control, which is the number of reports they feel a manager can effectively manage.
Centralization & Decentralization
Centralization is the degree to which decision making takes place at upper levels of the organization.On the other hand ,if lower level employees provide input or actually make decisions known as decentralization.
The extent to which work roles are structured in an organization, and the activities of the employees are governed by rules and procedures.
Formalization creates a series of provisions that specify:
mission and goals
tasks of basic posts and organizational units
basic organizational relationships
ranges of responsibilities and power
patterns of action (main processes and procedures)
Formalization in practice implies the development of such documents as:
terms and conditions
range of activities