Organizational structure is about how jobs are formally divided, grouped and coordinated.

The key design question and answer for designing proper structure: The key Questions
Q 1. To what degree task subdivided into separate jobs. Referred as Work Specialization Q2. On what basis jobs will be grouped together? Referred as Departmentalization.

 Q3. To whom individuals and groups report? Referred as Chain of Command How many individuals can a manager efficiently and effectively handle? Referred as Span of control. Q5. Where does decision-making authority lies? The area relevant to this is centralization and decentralization Q6. To what degree rules and regulations to direct managers and employer? Referred as Formalization.

Departmentalization---- After dividing jobs through above process of work specialization, there is need to group jobs together so that common tasks can be coordinated. Four ways of Departmentalization1. Functions: - Efficiencies from putting like specialties together. Economies of scale by placing people with common skills together. 2. Product: - Increases accountability for product performance. 3. Geography: - Large areas have similar needs based on location. 4. Process: - Machine Shop, lathe, welding, milling. Each department specialization in one specific production technique

Departmentalization
On basis of Customers: - MS(Microsoft) Consumers- large Corporate software developers, small business. Each department common set of problems and needs that can best be met by having specialist for each. Large organization Japanese Electronic firm Each division along function and lines Manufacturing---- around processes Sales around seven geographical regions Each sales region on basis of a consumer groups. Important: - As task become more complex and more diverse, skills are needed to accomplish tasks management turn to cross functional team.

CHAIN OF COMMAND

The unbroken line of authority that intends from top of the organization to the lowest echelons and clarifies who reports whom: To whom do I go when I have a problem To whom am I responsible. Authority: - Rights inherent in a managerial position to give orders and expert the order to be obeyed. Why? To facilitate coordination, each managerial position is given a place in chain of command, and each manager is given a degree of authority in organization to meet his responsibility. When it has less relevance: - Due to empowerment of employees: Network computers allowed employees anywhere in organization to communicate anyone else without formal channels. Operating employees empowered to make decisions, previously reserved for management. Self managed cross functional teams and new structural designs that include multiple bosses.

SPAN OF CONTROL

How many employees ----- a manager efficiently and effectively direct. It determines no. of level and managers organization has? Narrow or small spans lie more hierarchies: Following disadvantages: 1. Expensive because it adds levels of management. 2. Vertical communication difficult, decision making slow. 3. Discourage employee autonomy.

SPAN OF CONTROL

Trends: - wide span of control: Reduce cost Cut overhead Spend decision making Increase flexibility, get closer to customer Empower employees

Degree to which decision making is concentrated at a single point in the organization. Implication: - The more lower level personnel provide input or are actually given the discretion to make decision, the more decentralized. Formalization: - the degree to which jobs within the organization are standardized. Implication: - High Formalization- employees can be expected always to handle the same input in exactly the same way, resulting in a consistent and uniform output.

COMMON ORGANIZATION DESIGNS

Small Organization: - Simple structure low degree of departmentalization, wide span of control, authority centralized in a single person, and little formalization. But as it grows big information overload at top- decision making becomes slower if organization size increases. The bureaucracy: - A structure with highly routine operating tasks achieved through specialization, very formalized rules and regulation, tasks that are grouped into functional departments, centralized authority, narrow span of control and decision making that follows the chain of command. Primary strength of bureaucracy lies in its ability to perform standardized activities in a highly efficient manner.

Specialization creates subunit conflicts. Functional unit goals can override the overall goals of the organization. The bureaucracy is efficient only as long as employees confront problems that they have previously encountered and for which programmed decision rules have already been established. Matrix Structure: - Matrix combines two forms of departmentalization: - functional and product.

Strengths: - Putting specialists together, which minimizes the no. necessary while allowing the pooling and sharing of specialized resources across products. Disadvantages: - Difficulty of coordinating the task of diverse functional specialists so that their activities are completed on time and within budget. MATRIX: Gain Strength of each while avoiding weaknesses Strength: 1. Ability to facilitate coordination when the organization has a multiplicity of complex and interdependent activities. 2. Facilitates efficient allocations of specialists. Disadvantages: - Reporting to more than one boss introduces role conflict, unclear expectations. introduce role ambiguity. The comfort of bureaucracys predictability is absent, replaced by insecurity and stress.

Team Structure: - A device to coordinate work activities The primary characteristics of team structure are that it breaks down departmental barriers and decentralized decision making to level of the work team. Team structures also require employees to be generalists as well as specialists. In large organization, the team structure complements what is typically a bureaucracy. Example: Motorola, Xerox, Saturn self managed teams for improving productivity. Boeing, HP need to design new products or coordinate major projects cross functional team formed.

THE VIRTUAL ORGANIZATION

The core of the organization is a small group of executives whose job is to oversee directly any activities that are done in house and to coordinate relationships with other organization that manufactures distribute and perform other crucial functions for virtual organization. The major advantage is its flexibility. The primary drawback is that it reduces management control over key parts of its business.

Independent R & D Consulting Firm

Advertising Agency

Executive Group

Factories in South Korea

Commissioned Sales Representatives

ORGANIZATION DESIGN

The Boudaryless/ Horizontal Organization: - An Organization that seeks to eliminate the chain of command, have limitless span of control, and replace departments with empowered teams. Reorganizing vertical and horizontal teams.
Cross hierarchical teams, which includes top executives, middle manager, supervisors and operative employees, Participative decision making practices, and the use of 360 degree performance appraisal. Example of GE is there which break down vertical structure.

To reduce these horizontal barriers is to replace functional departments with cross functional teams and organize activities around processes. Example some AT & T units are now doing annual budget based not on functions or department but on processes such as maintenance of worldwide telecommunication network.

1. Strategy: - Structures should follow strategy. The structure will need to be modified to accommodate and support this change. Three types: Innovation: - Organic A loose structure low specialization, low formalization and decentralization. Cost minimization: Mechanistic Tight control, extension work specialization, high formalization high centralization. Imitation: - Mechanistic and organic Mix of loose with tight properties, tight control over current activities and looses controls for new undertaking. 2. Organization Size: - 2000 or more people tend to move specialization, more departmentalization, more vertical levels, more rules and regulations than do small organization , size affects structure at decreasing rates. Impact of size becomes less important as an organization expands. 3. Technology: - How an organization transfer its inputs into outputs. technologies: - degree of routine-ness technology tend either routine or non routine activities. Routine functions are Automated & Standardized operations. Non routine activities like custom shoe making technology is used for customization.

Technology & Org. Structure

Therefore Relationship between technology and formalization is usually positive. Relationship between technology and centralization: -

Routine technologies Centralized structure Non Routine Technologies Decentralized structure. Moderated by degree of formalization: If degree high decentralization If degree low centralization. Environment; Institutions or forces outside Organization that potentially affect the Org. Performance. The organization that operate in scarce, dynamic and complex( having intense competition) face greater degree of uncertainty. They have little room for error, high unpredictability and diverse set of elements in the environment. To monitor constantly. The more degrees of uncertainty the more organic a structure should be.

ORGANIZATIONAL DESIGN & EMPLOYEE BEHAVIOR

Work Specialization: - Higher employee productivity but reduced job satisfaction but individual difference more important some feel satisfied with specialization. Research Negative behavior outcomes from high specialization are most likely to surface in professional jobs occupied by individuals with high needs of growth and diversity. 2. Span of Control Studies no relationship between it and performance. Individual difference more important Some prefer autonomy other security of boss.

ORGANIZATIONAL DESIGN & EMPLOYEE BEHAVIOR Employees abilities and degree of structure determines span of control, if abilities more span can be wider. 3. Centralization and job satisfaction Less Centralized greater amount of participative decision making leads to greater satisfaction. Individual Differences: - Low Esteem dont prefer decentralization or participative decision making. Therefore individual differences + culture difference (countries with high power distance prefer mechanistic structures) At times of selection individual characteristics should be matched with organization charac.

SUMMARY
Organization Structure- Its determinants & outcome 1determines2 leads to 3 moderated by 4 1.Causes: Strategy, Size, Technology, Environment 2.Sructure Designs: Mechanistic, Organic, Imitation 3. Performance and Satisfaction 4. Individual differences and Cultural differences. Other Conclusions:1) If controls are tight, behavior will tend to vary within narrow range2) If reverse greater behavior diversity. Structure not only defines What I am suppose to do, whom I have to report etc. but also constraint to the extent that it limits and controls what one does. Also important is implicit model of Organization- Perception that people hold regarding structured variables formed by observing things around them . It is that which will effect their behaviors. ( Apart from formal structure how informal systems are working also important)