ORGANIZATION STRUCTURE

WHAT IS ORGANIZATIONAL STRUCTURE? According to STEPHEN P ROBBINS “An organizational structure defines how job tasks are formally divided, grouped and coordinated.” According to FRED LUTHANS “Organization structure represents the skeleton framework for organizational behavior.” Organizational structure is defined as “the framework of tasks, reporting and authority relationships within which an organization functions.”

NEED FOR FORMAL ORGANIZATION STRUCTURE Facilitating Management Encouraging Growth Optimum Use of Technological Improvement Encouraging Human Use of Human Beings Stimulating Creativity

Department- alization Chain of command Formalization Span of control Elements of organization structure Department- alization Chain of command Formalization Span of control Work specialisation Centralization and De-centralization

Work Specialization Work Specialization or Division Of Labor refers to the degree to which activities in an organization are subdivided into separate jobs. In essence, individuals specialize in doing part of an activity rather than the entire activity.

Departmentalization The basis by which jobs are grouped together is called Departmentalization. The various ways by which Departmentalization can be done are:- Functional Product Customer Geographic

Chain of Command Who reports to whom?

How many people can a manager manage? Span of Control How many people can a manager manage?

Formalization It refers to the degree to which the jobs within the organization are standardized. The degree of formalization can vary widely between organizations and within organizations.

The Degree of Formalization Lower Higher Low Formalization Standardization Employee Freedom High Formalization Higher Lower

Centralization and Decentralization Formal decision making authority is held by a few people, usually at the top Centralization Decision making authority is dispersed throughout the organization Decentralization

Making Decisions in Organizations High Managerial Control Employee Empowerment High Centralized Decision Making Decentralized Decision Making Low Employee Empowerment Managerial Control Low

FORMS OF ORGANIZATIONAL STUCTURES The Line and Staff Organization Structure The Functional Organization Structure The Divisional Organization Structure The Matrix Structure The Project Organization Structure Free form Organization Structure Network Organization Structure

Line and Staff Organization Structure Line Departments – Substantive (direct) in its contribution to organization’s overall objective Staff Departments – Objective (indirect) in its contribution to organization’s overall objective Line and Staff conflict Reasons of conflict are: Difference in view points Lack of Demarcation between Line and Staff Lack of proper understanding of authority Different background

Functional Organization Structure Traditional concept of organizing. The basis of departmentation is the various functions to be performed by the organization. Widely used in medium and large organizations.

Divisional Organization Structure Also known as Profit Decentralization. Organization is divided into fairly autonomous units. Each unit is self contained and directly accountable to the organization. Basis of Divisionalisation Product Divisionalisation Territorial Divisionalisation Strategic Business Divisionalisation

Product Divisionalisation Vice President Sales and Marketing Vice President Research and Development Vice President Materials Management CEO Vice President Finance Canned Soups Division PDM Frozen Vegetable Entrees Baked Goods Centralized support functions Divisions

Geographic Divisionalisation Regional Operations CEO Central Support Functions Individual stores

Matrix Organization Structure It is the realization of two dimensional structure which emanates directly from two dimensions of authority.

Matrix Structure CEO V ice President Engineering Finance Purchasing Sales and Marketing Research and Development Product A Manager Product B Product C Product D Product Team Two-boss employee

Project Organization Structure

Free Form Organization Also known as naturalistic, organic form of organization structure. Free form structures reduce the emphasis on positions, departments and other formal units, and on the organizational hierarchy. Free form organizations are suitable for those industries which have to work in highly dynamic environments.

Network organization structure A recent innovation in organizational architecture is the use of network structures. A network structure is a cluster of different organizations whose actions are coordinated by contracts and agreements rather than through a formal hierarchy.