Organisational Relations and Dynamics

Concept of Organizational Structure

Organizational Structure defines how job tasks are formally divided, grouped

and coordinated. An organizational design is the overall set of structural

elements and the relationship among those elements used to manage the total

organization. It is a means to implement strategies and plans to achieve

organizational goals. Managers need to address six key elements when they

design their organization’s structure: work specialization, departmentalization,

chain of command, span of control, centralization and decentralization, and

formalization.

Six key questions that managers need to answer in designing the proper

organization structure

Work specialization To what degree are tasks subdivided into separate

jobs?

Departmentalization On what basis will jobs be grouped together?

Chain of command To whom do individuals and groups report?

Span of control How many individuals can a manager efficiently and

effectively direct?

Centralization and

decentralization

Where does decision making authority lie?

Formalization To what degree will there be rules and regulations to

direct employees and managers?

Common organizational Designs

The simple Structure

The simple structure is not elaborated. It has a low degree of

departmentalization, wide spans of control, authority centralized in a single

person, and little formalization,. The simple structure is ‘flat’ organization; it

usually has only two or three vertical levels, a loose body of employees, and

one individual in whom the decision- making authority is centralized. The

strength of the simple structure lies in its simplicity. It’s fast, flexible,

inexpensive to maintain, and accountability is clear.

One major weakness is that it’s suitable for only small organizations. But it does not mean that it is strictly limited to small organizations, it’s just harder to make it work effectively in larger firms. It becomes increasingly inadequate as an organization grows because it has low formalization and high centralization tend to create information overload at the top.

As size increases, decision making typically becomes slower and can eventually come to a stand still as the single executive tries to continue making all the decisions. The simple structure’s other weakness is that it is risky: Everything depends on one person. Death, bankruptcy, madness, destroy the organization’s information and decision making center.

2.Bureaucracy

Max Weber developed this design of the organization. The Webbrian perspective suggests that a bureaucracy is a model of organization design based on a legitimate and formal system of authority. This model is also regarded as ‘red tape’/ rigidity. Weber viewed the bureaucratic form of organization as logical, rational and efficient. According Weber, the ideal bureaucracy exhibits five basic characteristics:

The organization should adopt a distinct division of labor, and

each position should be filled by an expert.

The organization should develop a consistent set of rules to

ensure that task performance is uniform.

The organization should establish a hierarchy of positions or

offices that creates a chain of command from the top of the

organization to the bottom.

Managers should conduct business in an impersonal way and

maintain an appropriate social distance between themselves

and their subordinates.

Employment and advancement should be based on technical

expertise and employees should be protected from arbitrary

dismissal.

The bureaucracy is characterized by highly routine operating tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional department, centralized authority, narrow spans of control, and decision making that follows the chain of command

The best examples of bureaucracies today are government agencies and colleges. As these organizations have to deal with a large number people in equal and fair manner rules, regulations, and standard operating procedures are needed.

A primary strength of bureaucracy model is that several of its elements improve efficiency because of being performed standardized activities depending upon the fixed rules and regulation, it results in economies of scale

It also has several disadvantages like-Bureaucratic model is inflexible and rigid, it is too hard to change the rules once it is determined. It also neglects the humanity and social part of the human life.

3. Matrix Organization Structure:- This type of structure is also called as project organization , grid organization or multiple command system. It is mixed form of organization in which functional and departmental/project forms overlap.

especially matrix structure integrates the efforts of the functional and project authority.

The authority of the functional manager flows vertically down from the superior to the subordinate. And the project authority flows horizontally crossing vertical line. In this structure each subordinate works under two superiors. As such this structure does not follow the principle of unity of command.

General Manager

Manager Projects

Manager Production

Manager Marketing

Manager Finance

Manager Personnel

Project AProduction

groupMarketing

groupFinance group

Personnel group

Advantages

The matrix structure is an efficient means for bringing together the diverse specialised skills required to solve a certain problem.

Problem of coordination , which is faced by many organisations , are minimized. Because in it most employee works together as a team , such problems do not arise.

Employees learn each others job better while working together and importance of such jobs in achieving the objectives.

It gives flexibility to organisation. Organisational resources can be used in more effective and flexible manner.

Sufficient time for top level management.

Disadvantages

In practice it is very difficult for employees to adopt and adjust with matrix structure.

As there is violation of unity of command , employee may face the situation of conflict.

As this structure is costly because functional and projects manager’s financial facility is to be paid.

Lack of commitment and difficult to balance.

4. Team Structure:- Team organizational structure is that where emphasis is given on project type teams having little and some cases no functional hierarchy. Further team structure is a design in which an organisation is made up of teams and each team works towards a common goal. Since the organisation is made up of groups to perform the functions of company , team must perform because they are held accountable for their performance.

In a team structure there is no hierarchy or chain of command. They are given power so they can work the way they want to.

A team generate positive synergy through coordinate effort. Fig.

Advantages

Collective goal setting.

Mutual trust

Effective communication

Decision by understanding

Self directing

Flexible in operation

Disadvantages

Source of conflict

Difficult to coordination

Lack of effective control

More interdependence

Complex in decision

Spoil in human relation

5. Virtual / Network organisation:- With an objective of eliminating the unnecessary department and to perform specialised works through outsource expert network structure is designed. In network structure there is a very small staff in head office to perform administrative work. On the basis of necessity it managed temporary workers and outsiders basic support service to meet the demand of changing situation.

Further , the management identifies its core competencies and then outsources non critical task to other organisation on the basis of contract. At present world’s leading business houses performs business through computer network.

Corporate office

Finance

Marketing

Production

Agencies

Banks

Suppliers

Advantages

Eliminate over departmentalization

Minimize administrative cost

Benefit of specialization

Flexible in operation

Facilitates in concentration

Disadvantages

Possibility of conflict

Lack of secrecy

Difficult to coordinate

Increase dependency

Loss of control

6. Boundary less organisational structure:- In boundary less structure there is no vertical and horizontal level. It is not limited by boundary. The contingency approach leads this approach. This structure is not restricted by chain of command and span of control as well. Information are freely passed. For this computer links the people.

Advantages

Globalization , competition and strategic alliances.

Rapid technological change and innovation

Disadvantages

Lack of coordination

Chances of conflict

Expensive

Organization Design and Behaviors

The effects of organization designs in employees behaviors can be considered in terms of

• Work Specialization( Lowers job satisfaction but increase productivity)

• Centralization ( Participative decision making)

• Span of control ( No relation between them)

Work Specialization( Lowers job satisfaction but increase productivity):- When a human repetitively performs same jobs than the employee feel lower job satisfaction and monotonous. Along with this there is also chances of high productivity because of less error and mistake.

• Centralization :- Definitely , in general less centralized organization have a great amount of autonomy. And autonomy appears positively related to job satisfaction. But , again while one employee may value freedom ,another may find autonomous environment frustratingly ambiguous.

• Span of control :- It is probably safe to say no evidence supports a relationship between span of control and employee satisfaction or performance. Although , a large spans might leads to higher employee performance because they provide more distance supervision and more opportunity for personal initiative. Some people like to be alone and some prefer security of boss.