The term 'organization' is used in many ways.  A group of people united by a common purpose.  An entity, an ongoing business unit engaged in utilizing resources to create a result.  A structure of relationships between various positions in an enterprise.  A process by which employees, facilities and tasks are related to each other, with a view to achieve specific goals. 1

 organizational structure - the formal framework by which job tasks are divided, grouped, and coordinated  Organization, as a structure, has the following features:  Two or more persons  Common goals  Cooperative efforts  Division of work  Communication  Rules and regulations 2

3 Organisation as a Process (Organising) Organizing is the process by which employees, facilities and tasks are related to each other, with a view to achieve specific goals.

The process of organizing, thus, involves the following steps:  Identifying the work  Grouping the work  Establishing relationships  Delegating authority  Providing for coordination and control 4

5  Formal Structure of well defined jobs, each bearing a definite measure of authority,responsibility & accountability  Informal A network of personal & social relations not established or required by the formal org. but arising spontaneously as people associate with one another.

 organizational design - process of developing or changing an organization’s structure process involves six key elements 6

 Work specialization  Departmentation  Chain of command  Span of control  Centralization & decentralization  formalization 7

 Work Specialization  the degree to which tasks in an organization are divided into separate jobs individuals specialize in doing part of an activity rather than the entire activity 8

 Chain of Command  continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom authority - the rights inherent in a managerial position to tell people what to do and to expect them to do it responsibility - the obligation to perform any assigned duties unity of command - a person should report to only one manager 9

 Formalization  the degree to which jobs within the organization are standardized standardization - removes the need for employees to consider alternatives  extent to which employee behavior is guided by rules and procedures employee allowed minimal discretion in highly formalized jobs explicit job descriptions clearly defined procedures 10

11 Span of management or span of control, refers to the number of subordinates that a superior can supervise effectively. determines the number of levels and managers in an organization

12 The number that is more appropriate for a particular manager depends on various factors.  Capacity of superior  Capacity of subordinates  Nature of work  Degree of decentralisation and delegation

13  Staff assistance provided  availability of standardized procedures  sophistication of organization’s information system

14 Departmentation is a means of dividing a large and complex organization into smaller, flexible administrative units. Departmentation is necessary because it involves grouping of people or activities into a single department or unit to achieve organizational goals.

 SIMPLE STRUCTURE –  low departmentalization, wide spans of control, authority centralized in a single person, and little formalization commonly used by small businesses as organizations increase in size, the structure tends to become more specialized and formalized 15

 Functional Departments  Categorizing jobs according to the activity performed  Product-Service Departments  Grouping jobs around a specific product or service  Geographic Location Departments  Adopting a structural format based on the physical dispersion of assets, resources, and customers  Customer Classification Departments  Creating a structural format centered on various customer categories 16

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 Work Flow Process Departments in Reengineered Organizations  Creating horizontal organizations that emphasize speedy work flow between two points: Identifying customer needs Satisfying customer needs 20

Line and Staff Organisation The line and staff organisation combines the good features of both the line organisation and functional organisation. The staff specialists provide advice and support to the line managers in getting the work done. The line organisation is paramount and the staff organisation is created to service it.

What is Staff? Staff authority is advisory, which means that the staff is a supporting unit that recommends action or alternative actions to the line manager.

CONTEMPORARY ORGANIZATIONAL STRUCTURES 23

24 Characteristics of New Organizations Fewer organizational layers More teams Smallness within bigness

 Project Structure - employees work continuously on projects all work performed by teams comprised of employees with appropriate skills and abilities tends to be very fluid and flexible no rigid departmentalization or organization hierarchy managers serve as facilitators and mentors 25

 Matrix Structure - assigns specialists from different functional departments to work on projects led by project managers adds vertical dimension to the traditional horizontal functional departments creates a dual chain of command violates unity of command project managers have authority in areas relative to the project’s goals functional managers retain authority over human resource decisions (e.g., promotions) 26

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 Team-Based Structures - entire organization is made up of work teams employee empowerment is crucial teams responsible for all work activity and performance complements functional or divisional structures in large organizations provides flexibility of teams 29

 Hourglass organization: Three-layer structure with constricted middle (management) layer  Cluster organization: Collaborative structure in which teams are the primary unit  Virtual organizations: Internet-linked networks of value-adding subcontractors 30

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 Each SBU has a clearly defined prdt/mkt. segment & clearly defined strategy.  Each SBU develops its strategy tailored to its needs & aligning it to corporate capabilities & needs.  Each SBU is allocated resources-both physical & human – acc. To its needs & contributions to the achievement of organizational objectives. 32

Organizational Design Boundaryless Teams Empowerment Organizational Culture Strong Mutual Relationships Sense of Community Caring Trust Information Sharing Open Timely Accurate Leadership Shared Vision Collaboration The Learning Organization 33