Organizational Design - Soumyaa Srikrishna
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The document outlines the principles of organizational design, emphasizing the creation of roles, processes, and formal reporting relationships to ensure that an organization's core qualities align with its vision. Key concepts include differentiation, integration, centralization versus decentralization, and the impact of technology and environment on organizational structure. It also discusses challenges faced in design, effective characteristics, and network organizations that focus on core competencies while outsourcing other functions.
Organizational Design - Soumyaa Srikrishna
- 2. Definition “creation of roles, processes, and formal reporting relationships in an organization.” “the framework through which an organization aims to realize its core qualities as specified in its vision statement. It provides the infrastructure into which business processes are deployed and ensures that the organization's core qualities are realized across the business processes deployed within the organization.”
- 3. Strategy Structure Business Process & Lateral Links Reward Systems Human Resource Management Galbraith's Star Model of organizational design
- 4. Strategic Grouping Behavior Function Product or category Customer or market Geography Matrix
- 5. Characteristics of Effective Organizational Design Simplicity Flexibility Reliability Economy Acceptability
- 6. Importance improve communication, increase productivity, inspire innovation
- 7. Challenges Unworkable job Politics Over-regulation Applying for your job Cultural clashes
- 8. Hierarchy Hierarchy refers to the authority levels of the organizational pyramid œAn authority structure is the glue that holds the levels of an organization together œMost executives today believe that fewer layers create a more efficient, fast-acting, and cost effective organization Senior Management Middle Management Lower Management
- 10. Span of Control Refers to the number of subordinates who report directly to an executive or supervisor The differences in the span of control have direct implications on the shape of the organization : Tall organizations: span of control remains constant, or narrow œFlat organizations: span of control is wide with fewer reporting levels
- 11. Organizations must find the optimal span of control to be effective œNarrow enough to permit manages to maintain control over subordinates Wide enough so that the possibility of micromanaging is minimized The optimal span of control is dependant on the following factors œis the work clearly defined œAre subordinates highly trained and do they have access to information œIs the manager highly capable and supportive œAre jobs similar and performance measures comparable Do subordinates prefer autonomy to close supervisory control
- 12. Delegation
- 13. Delegation refers to the assignment of new or additional responsibilities to a subordinate œDelegation is perhaps the most fundamental feature of management because it entails getting work done through others œDelegation is important at all hierarchical levels
- 14. Define the Goal succinctly Select the person for the task Subordinate’s view on selected approach Provide Resource, Time and Authority to perform the job Schedule Check points for review Follow through with discussion of progress at various levels
- 16. Differentiation “Differentiation is the process of deciding how to divide the work in an organization. It ensures that all essential tasks are assigned to jobs and will be accomplished. “ Dimensions of differentiation: 1. Manager's goal orientation 2. Time orientation 3. Interpersonal orientation 4. Formality of structure.
- 17. Differentiation contd… Horizontal differentiation: the degree of differentiation between organizational subunits), Vertical differentiation: difference in authority and responsibility in the organizational hierarchy), Spatial differentiation: geographic dispersion of an organization’s offices, plants, and personnel
- 18. Integration Integration is the process of coordinating the different parts of an organization. Vertical linkages integrate activities up and down the organizational chain of command. Horizontal linkages provide for communication and coordination across jobs and departments. The flatter the organization, the more necessary horizontal integration linkages become.
- 20. Centralization Centralized organizational structures rely on one individual to make decisions and provide direction for the company. Small businesses often use this structure since the owner is responsible for the company’s business operations. Decentralization Decentralized organizational structures often have several individuals responsible for making business decisions and running the business. Decentralized organizations rely on a team environment at different levels in the business. Individuals at each level in the business may have some autonomy to make business decisions.
- 21. Advantages Centralized Centralized organizations can be extremely efficient regarding business decisions. Business owners typically develop the company’s mission and vision, and set objectives for managers and employees to follow when achieving these goals. Decentralized Decentralized organizations utilize individuals with a variety of expertise and knowledge for running various business operations. A broad-based management team helps to ensure the company has knowledgeable directors or managers to handle various types of business situations.
- 22. Disadvantages Centralized Centralized organizations can suffer from the negative effects of several layers of bureaucracy. These businesses often have multiple management layers stretching from the owner down to frontline operations. Business owners responsible for making every decision in the company may require more time to accomplish these tasks, which can result in sluggish business operations. Decentralized Decentralized organizations can struggle with multiple individuals having different opinions on a particular business decision. As such, these businesses can face difficulties trying to get everyone on the same page when making decisions.
- 23. Common Terms
- 24. . Standardization is the extent to which work activities are accomplished in a routine fashion. Specialization is the degree to which jobs are narrowly defined and depend on unique expertise. Formalization is the degree to which the organization has official rules, regulations, and procedures. An organization may have a formal structure, but may operate informally. Complexity refers to the number of different types of activities that occur in the organization.
- 25. Coordination
- 26. Coordination by Standardization When organizations coordinate activities by establishing routines and standard operating procedures that remain in place over time, we say that work has been standardized œTo improve coordination, organizations may also use formalization œPresence of rules and regulations governing how people in the organization interact
- 27. Coordination by Plan Interdependent units are required to meet deadlines and objectives that contribute to a common goal
- 28. Coordination by Mutual Adjustment The simplest and most flexible approach to coordination œUnits interact with one another to make accommodations in order to achieve flexible coordination œThis approach may take more time than other coordination models
- 29. Impacts
- 30. Technology “the combination of skills, knowledge, abilities, techniques, materials, machines, computers, tools, and other equipment that people use to convert or change raw materials, problems, and new ideas into valuable goods and services”
- 31. Technology can have an impact on how your organization is structured and how work flows. When computer networks became popular, it became easier for people to work as groups. People did not need to be in the same room, or even the same building, to be efficient. Technology can create positions within your company and it can eliminate positions. When filing is done electronically, there is no longer a need for as many file clerks as you once had but there is a need for a department of technicians to maintain and grow the computer network. As technology continues to change the function of jobs in the workplace, the landscape of organizational structure changes with it.
- 32. Environment The strategies available to an organization are determined by its structure. Different strategies are better suited to different environments. Thus, if an organization is to thrive its structure must fit the business environment in which it develops. While there are no hard and fast rules, there are some environmental features that tend to have predefined effects on the organization.
- 33. Environments factors Degree of Change Complexity Market Size and Resources Coping Strategies
- 35. Network (Virtual) Organizations A network (or virtual) organization performs only certain core functions and outsources the remaining functions to other companies. Consequently, the network organization is able to focus on its core competencies doing what it does best. The network organization is able to maintain greater flexibility in responding to environmental demands.
- 36. Virtual Organization Advantages Each company in the network business alliance focuses on its core competencies. Investment risk is spread across the partners. Resources can be used more wisely, by directing them toward each organization’s core competencies. Each company maintains greater flexibility to cope with an uncertain environment. Disadvantages Lack of adequate communication and coordination between the network (or virtual) organization and its partners will undermine the effectiveness of the alliance. The network organization, by outsourcing significant functions, increases its risk because it must rely heavily on other businesses. The network organization sacrifices some degree of control.
- 37. Questions © Soumyaa Srikrishna (soumyaasrikrishna@Hotmail.com)