Organizational Design and Structure Organization is a pattern of relationship. Organizational design os the design which is most appropriate for ‐
Strategy ‐
People ‐
Technology and ‐
Task of the organization Organizational Structure: It is the way in which a organization’s activities are divided, organized and coordinated. Four building blocks: Managers tale four fundamental steps when they begin to make decision about organizing 1. Division of labor: Divide the total workload into tasks that can logically or comfortably be performed by individual or group. 2. Departmentalization: Combine tasks in a logical and efficient manner. It is the grouping of employees and tasks. 3. Hierarchy: Specify who reports to whom in the organization. This linking of departments results organizational hierarchy. 4. Coordination: It is the setup mechanism for integrating departmental activities into a coherent whole and monitoring the effectiveness of the integration. Extnt of coordination depends on the ‐
Nature of task performed ‐
The degree of interdependence of people in various department performing them Span of management Control: Choosing an appropriate span of management control is important for two reasons‐ 1. The span can effect what happens to work relationship in particular department. Too wide span with flat hierarchy means that managers are over extended and employees are receiving too little guidance and control. Abdullah‐Al‐Mamun, Lecturer, Dept. of IPE, BUET. 2. The span can affect the speed of decision making in situation where multiple level of organization hierarchy is necessarily involved. Narrow span management creates tall hierarchy with many levels that slows down the decision making process. Downsizing: Companies are moving toward flatter organizational hierarchies. This trend of shrinking the organization to leaner and more flexible structure that can respond more readily to change of global market is called DOWNSIZING. Differentiation: The difference in attitude and working styles that arise naturally among members of different departments that can complicate the coordination of the organization. Four types of differentiation •
Perspective: People in different work unit tend to develop their own perspective on the org’s goal and how to pursue them. •
Time orientation: People in work units often differ in time orientation. Production people are ready to handle a problem immediately when R&D people tend to spend a year on a problem. •
Interpersonal style: In production floor people usually have to make fast decision, like sudden communication and clear cut answer, where R&D persons will prefer more easy going communication that encourage brain storming. •
Formality: While production unit may need very specific standards (masks, gloves); HR department may have some general standards. Integration: ‐
The degree to which members of different department work togaather in a unified manner. ‐
Lawrence and lorsch emphasis that, while departments should cooperate and task should be integrated where necessary, it is important to reduce the differentiation that contribute to task accomplishment. ‐
Sales department may give advice to ad department about graphics and packaging. However if salesperson view themselves as subordinate to ad department, functioning of both department will be hampered. Organizational design: The Classical approach: Abdullah‐Al‐Mamun, Lecturer, Dept. of IPE, BUET. Max weber, Fredrich taylor and henry fayol were major contributors of the classical approach. They believed that the most efficient and effective organization had ‐
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A rigid hierarchical structure Strong management Bureaucracy (According to Weber it consist of…) o
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Specialization of activities Appointment by merit Provision of career opportunity for members Reutilization of activities Rational , Impersonal organizational climate Task technology approach: The “Task Technology” refers to different kind of production technology for different type of products. Woodward’s team divided about 100 British companies into three groups according to their respective task technology, 1. Unit and small batch production 2. Large batch and mass production 3. Process production Woodward’s study leads to three general conclusions, 1. The more complex the technology (from unit to process), the greater the number of managers and managerial levels. 2. The span of management for first level managers (Supervisors) increases from unit to mass production but decreases from mass to process production. Bcs, in both unit and process low level worker do highly skilled work and form narrow work group. But in mass process production low skilled worker work under the supervision of managers. 3. As, firms technological complexity increases, its clerical and administrative staffs become larger bcs manager have to concentrate on specialized tasks. Complex equipment requires more maintenance and scheduling need more paper work. The Environmental approach: Tom burns and G.M. Stalker incorporates organizational design into design consideration. 1. Mechanistic system: ‐
Activities are broken down into specific specialized tasks. Abdullah‐Al‐Mamun, Lecturer, Dept. of IPE, BUET. ‐
Objectives are precisely defined. ‐
Management follow the classical bureaucratic chain of command ‐
Best suited for stable environment (Armed force) ‐
2. Organic system: ‐
Individuals more likely to work in groups ‐
Less emphasis on taking and giving orders ‐
Members communicate across all level of management ‐
Best suited for turbulent environment (Ad firm) ‐
In turbulent env. Jobs must constantly be redefined to cope with the ever changing world. Type of organizational structure: 1. Functional organization: ‐
Form of departmentalization where individuals engage in one functional activity ‐
Most logical and basic form of departmentalization ‐
Used mainly in smaller firms that offer limited line of products ‐
Makes supervision easier since each manager is expert in a narrow range ‐
Easier to mobilize specialized skills ‐
Disadvantage if organization grows o Difficult to get quick decision o Harder to determine accountability and judge performance o Coordination of members becomes difficult for top mgt. 2. Product or Market Organization: ‐
Division based on product or group of product, Geographic area or Type of customer. Abdullah‐Al‐Mamun, Lecturer, Dept. of IPE, BUET. ‐
When departmentalization becomes too complex to coordinate, top management creates semiautonomous divisions. ‐
In each division managers and employee design, produce and market their product. ‐
The division resembles a separate business and division head is accountable for profit or loss. 3. Matrix Organization: ‐
It refers as “Multiple command system” that attempts to combine the benefit of both types of design avoiding their draw backs. ‐
Have two types of structure simultaneously, with two bosses, with two chains of command. ‐
One is functional and diagrammed vertically in span of management. Second is horizontal that combine people from various functional departments into projects or business team (Construction firm). Abdullah‐Al‐Mamun, Lecturer, Dept. of IPE, BUET.