Archive for Organization Structure

ORGANIZATION STRUCTURE AND CHART-1

Both the organization chart and job description are simplified abstractions of the actual situation. In reality there are many more positions and relationships than indicated in the organization chart. It might happen that industrial cleaning might not clean all required things. The degree of authority a superior has over his subordinate is also not indicated in the chart, nor is the relationship between two managers at an equal level reflected in the organization chart.

 

Despite all these limitations, the organization chart is an extremely useful tool in understanding and designing the structure. The structure of an organization, unlike that of a physical mechanical or biological system, is not visible. Therefore, it can only be understood by a representative model and by observing its behaviour.

 

The elements of an organization structure are: 

1.      the network of formal relationships and duties, i.e. the organization chart plus the job descriptions,

2.      the manner in which various tasks and activities are assigned to different people and departments (differentiation),

3.      the manner in which the separate activities and tasks are coordinated (integration),

4.      the power, status, and hierarchical relationships within the organization (authority system),

5.      the planned and formalize policies, procedures and controls that guide the activities and relationships (administrative system), and

6.      the flow of information and communication network.

 

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ORGANIZATION STRUCTURE AND CHART

Organization structure refers to the formal, established pattern of relationships amongst the various parts of a firm or any organization. The fact that these relationships are formal implies that they are deliberately specified and adopted and do not evolve on their own. Of course, it may sometimes happen that given an unusual situation, new working relationships may evolve and which may later be adopted as representing the formal structure. For example for a blinds company who manufacturing vertical blinds, roman shades, faux wood blinds, formal relation between sales department and production department is must.

 

The second key word in our definition of structure is ‘established’. Only when relationships are clearly spelled out and accepted by everyone, can they be considered as constituting a structure. However, this does not mean that once established, there can be no change in these relationships. Changes may be necessary with passage of time and change of circumstances, but frequent and erratic changes are to be avoided. A structure can be based on relationships only if they exhibit a certain degree of durability and stability.

 

The organization chart is a rather abstract illustration of the structure. To get a more complete picture, the chart may be supplemented by job descriptions of each position. The job description gives in detail the activities and responsibilities expected of the person occupying the position.

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ORGANIZATION STRUCTURE AND DESIGN

Organizing is the formal grouping of activities and resources for facilitating attainment of specific organizational objectives. It is possible to achieve objectives without formally organizing, but there is likely to be great wastage of resources and time. Organizing ensures that objectives are achieved in the shortest possible time, in an orderly manner, with maximum utilization of the given resources. For a company who are selling blinds, vertical blinds, roman shades online, utilization of each leads given to them is most important part of organization.

 

In the context of a firm, its people, machines, building, factories, money, and credit available for use are the resources at its disposal. All these resources are limited. Your roles as a manager is to organize all these resources, so that there is no confusion, conflict, duplication or wastage in achieving your organization’s objectives and authority for utilizing the resources assigned to him, and the higher authority to whom he has to periodically report his progress. In this unit, we will take up all these issues for discussion, dwelling at some length on the various types of organization structure that you can choose from to suit your company’s specific objectives.

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Understanding Organizational Design

We are talking organization design in our blogs. Organizations are social units with specific purposes. The basic elements of organizations have remained the same over the years. Several disciplines provide the knowledge and the means to understand organizations. However, it is appropriate to look at organizations integrally in multi-disciplinary perspective. Three viewpoints have emerged, over the years in successive stages, each seeking to provide a window on the others. They are the classical approach, three streams stand out: bureaucracy, administrative theory and principles of scientific management. It is important to note that with the passage of time, the viewpoints have been changed or modified, but not replaced as such. Each major contribution brought new knowledge, awareness, tools and techniques to understand the organizations better.

Thus, today we are richer than ever before tin terms of our knowledge about approaches to understand organizations. We take example of portable car DVD players. Today there are so many companies who are manufacturing car DVD players like philips pet1002 , samsung DVD-L100 , JVC kd-avx33.  One person can have all knowledge of such products at one desk.  All the same, more knowledge meant reckoning with more complex variables to comprehend the complexities of human organizations. There is, as yet, no general, unified, universal theory as such. Organizations being diverse and complex in more senses than one, it is difficult, if not meaningless to be too general or too specific about them.

 

Organization structures based on classical bureaucratic principles are hierarchical. But modern organization theories attempted to modify them in the light of experience, changes in technology and knowledge about human behaviour. The centralized structures gave way to some sort of decentralization and thus transformed, partially at least, vertical (tall) organizations into horizontal (flat) ones, reflecting a shift in emphasis from command to consensus based self control. The relative conditions of instability and uncertainty transformed the classical mechanistic forms of management systems into organic ones.

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MATRIX ORGANIZATION

Matrix organization structure originated with the United states Aero Space Programme of the 1960s and the Aero space agency’s extraordinary and conflicting needs for system (for innovation) and order (for regulation and control). A matrix organization employs a multiple command system that includes not only a multiple command structure, but also related support mechanisms and associated organization culture and behaviour pattern. A matrix organization is not desirable unless (i) the organization must cope with two or more critical sectors (functions, products, services, areas); manufacturing of blinds and selling of roller shades, woven wood shades and paperless office management makes it complicated.

 

(ii) Organizational tasks are uncertain, complex and highly interdependent; industries like term life insurance, hotel and motels.

 

The structure involves the dual chains of command. The system must also operate along two dimensions simultaneously: planning, controlling, appraising and rewarding, etc., along both functional and product lines at the same time. Moreover, every organization has a culture of its own and, for the matrix to succeed the ethos or spirit of the organization must be consonant with the new form. Finally, people’s behaviour, especially those with two bosses and those who share subordinates, must reflect and understanding and an ability to work within such overlapping boundaries.

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Product versus Functional Forms-4

The discussion in the preceding section and an overview of literature on function vs product choice, permits us to observe that both forms of organization design have their own set advantages and disadvantages. The functional structure facilitates the acquisition of specialized inputs. In permits pooling of resources and sharing them across products or projects.

 

The organization can hire, utilize and retain specialists. However the problem lies in coordinating the varying nature and amount of skills required at different times. The product or project organization, on the other hand, facilitates coordination among specialists; but may result in duplicating costs and reduction in the degree of specialization. For example, a blinds manufacturing company who manufacture roller shades and woven wood shades, need to adopt product forms not functional. It depend on the type of business company is doing. A term life insurance company can go with functional while a motels industry need to select product. Thus, if functional structure is adopted, projects may fall behind; if product/project organization is chosen technology and specialization may not develop optimally. Therefore, the need for a compromise between the two becomes imperative.

 

The possible compromises between product and functional bases include, in ascending order of structural complexity:

 

  1. The use of cross-functional teams to facilitate integration. These teams provide some opportunity for communication and conflict resolution and also a degree of common identification with product goals that characterizes the product organization. At the same time, they retain the differentiation provided by the functional organization.

We will discuss on two other structural complexity in next post.

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Product Versus Functional Forms-3

Today we continue our talk on Product Versus Functional. Walker and Lorsch studies two plants which were closely matched in several ways. They were making the same product; their markets, technology, and even raw materials were identical. The parent companies were also similar; both were large national corporations that developed, manufactured, and marketed many consumer products. In each case divisional and corporate headquarters were located more than 100 miles from the facilities studied. The plants were separated from other structures at the same site, where other company products were made.

 

Both plants had very similar management styles. They stressed their desire to roster employee’s initiative and autonomy and placed great reliance on selection of well-qualified department heads. They also identified explicitly the same two objectives. The first was to formulate, package, and ship the products in minimum time at specified levels of quality and at minimum costs-that is, within existing capabilities. The second was to improve the capabilities of the plant.

 

In each plant there were identical functional specialists involved with the manufacturing units and packing unit, as well as quality control, planning and scheduling, warehousing, industrial engineering, and plant engineering.

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Product Versus Functional Forms-2

Lawrence and Lorsch highlighted important factors about specialization and coordination. According to them classical theorists saw specialization in terms of grouping of similar activities, skills or equipment. But this concept overlooks social and psychological consequences.

 

There is an important relationship between a units’s or individual’s assigned activities and the unit members’ patterns of thought and behavior. Functional specialists tend to develop patterns of behavior and thought that are in tune with the demands of their jobs and training. As such these specialists (e.g. industrial engineers and production supervisors) have different ideas and orientation about what is important in getting the job done. For example a cheap medical insurance quotes and term life insurance quotes both are different things. A health care insurance is related to medical insurance only while term life insurance is for life. This is referred to as ‘differentiation’ which means differences in thought patterns and behavior that develop among different specialists in relation to their respective tasks. Differentiation is necessary for functional specialists to perform their jobs effectively. 

 

Differentiation is closely related to achievement of coordination which may also be referred to as ‘integration’. Therefore, alternatively both differentiation and integration coexist. This is possible through effective communication channels. The appropriate mix of differentiation and integration in an organization is considered to be dependent on the nature of external factors such as markets, technology facing an organization as well as the goals of the organization. Since organizational pattern affects individual members, management and show concern to the kind of stress and cross functional conflicts that a certain pattern may produce. 

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PRODUCT VERSUS FUNCTIONAL FORMS-1

One of the issues in determining the form of an organization relates to the question of whether to group activities primarily by product or by function. Should all specialists in a given function be grouped under a common boss even if they deal in different products or should the various functional specialists working on a single product be grouped together under the same boss?

 

As with the problem of centralization versus decentralization, here too most managers find it difficult to say which choice will be the best one. We can understand this with example of gift shop. In gift shop there are birthday gifts, childrens gifts, get well gifts, holiday gifts. Each gift is having it’s own category but all fall under one heading gift.

 

Lawrence and Lorsch studies from a behavior point of view the criteria used in the past to make the choice to see whether a pattern emerges to provide meaningful clues to resolve the dilemma. Reviewing the literature they found that managers seem to make the choice based on three criteria:

 

1.      Maximum use of special technical knowledge.

2.      Most efficient utilization of machinery and equipment.

3.      The degree and nature of control and coordination required.

 

The major problem with each of these criterion concerns the trade-off involved in these decisions which may lead to unanticipated results and reduced effectiveness.

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MECHANISTIC AND ORGANIC SYSTEMS

Burns and Stalker propose two contrasting forms of management systems to suit different conditions. These are called as mechanistic organic forms. A mechanistic management system is considered appropriate to stable conditions while the organic form is suitable to changing conditions.

 

It is observed that organic systems are not hierarchical in the same way as mechanistic systems and they remain stratified based on expertise. Also, people’s commitment to the cause of the organization is supposed to be more in organic than mechanistic systems. In an organic form the hierarchic command gives way to consensus based commitment. The two forms of systems represent two ends of a continuum than being dichotomous. The relation of one form to the other is elastic and an organization may oscilate from one en (mechanistic) to the other end (organic) as the transition occurs in its conditions from relative stability to relative change.

We have considered different types of organization structures which have evolved over time. In response to complex, changing requirements. The continuum of structures range from centralization to decentralization, vertical to horizontal, mechanistic to organic and product to function. The predominant mode is decentralization with centralized control and a certain type of matrix in complex organizations. Each form has its own set of advantages and disadvantages. Compromises are possible in the context of organization’s environment, technology, culture and aspects of human behavior.

 

blinds, roller shades, woven wood shades

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