MBA management

Organizing Process Topics:

Delegation and decentralization


Definitions


1. According to Me Farland “delegation is the primary formal mechanism by which the net work authority relationship is established”.

2. According to Hodge and Johnson “a process whereby a superior divides his total work assignment between himself and subordinate manager or operative personal in order to achieve other operative and management specialization".

3. According to Terry “conferring authority from the executive or organizational unit to another in order to accomplish particular assignment”.

Elements of delegation


1. Assignment of the duties and responsibilities - this work is being done only at the time when a superior has no time to accomplish all the work. The superior automatically assign the work to the subordinates.

2. Delegation of authority - if the work is assigned to any subordinate, there will be a need for to accomplish it.

3. Accountability - accountability means that the subordinate is answerable to his immediate superior. If the subordinate has not accomplished the work then the superior is answerable to the management.

Principles of delegation


1. Delegation to go by results expected - the nature of this duty has equal rank with the extent of delegation of authority. The superior has to know what he expect from the subordinate before delegation of authority.

2. Non delegation of responsibility - a superior can delegate authority but not his responsibility. The superior has to be in touch with the subordinate to know the duties are performed and the authority is exercised properly the ultimate responsibility for the performance of duties remains with the superior.

3. Unity of command - the principle of unity of command insists that a subordinate should be assigned duties only by one superior and he is accountable to the concerned one.

Definition of limitation of authority - A person knows well that an authority alone can delegate the authority properly. There should be in written manuals which help the person to understand the authority in right direction.

Advantages of delegation


1. Basic of effective functioning - delegation lays the basic for effective functioning of an organization. It creates the relationship with other and achieve the objectives of organization.

2. Saving of time - delegation of authority enables the superior to allot more time to important matters like planning, organization, staffing, directing, coordinating, etc.

3. Reduction of work - delegation relives the superior to attending the routine matters. Normally these works are allotted to subordinates. It helps the superior to carry on more important work.

4. Opportunities for development - delegation of authority gives very good opportunity to the subordinates to grow it helps the superior to carry on more important work.

5. Benefits of specialized service - delegation helps the superior to get the benefits of specialized knowledge of various persons at lower level.

6. Efficient running of branches - if the business has many branch, the branch affairs or activates are looked after by a separate person. He is supposed to be in charge of this branch. When he can get adequate authority with responsibility he could work for the smooth and effective running of business.

7. Satisfaction to subordinates - delegation of authority will satisfy the self- actualization needs of the individuals.

Problems of delegation


Every superior is expected to delegate part of his duties and responsibility to his subordinates. A single person cannot perform all the work. So delegation is a very important characteristic of the organization.

The proper delegation of authority is made only at the time of a proper balance between feeling of the superior and subordinates.

Effective delegation - the superior has the aim to practice and encourage delegation for the efficient accomplishment of the organizational objectives. Hence, it is necessary that the nature and content of each job should be scientifically analysis to pinpoint the job that can he entrusted to subordinates.

Normally, minor and routine types of jobs are entrusted to the subordinate. The superior is not ready to perform even the ordinary routine jobs but at the same time, there are certain jobs which cannot be entrusted, for example, the preparation of budget, formulation of policies and framing rules and regulation.

Decentralization


Decentralization means that each section has its on workers to perform activities within the department. There will be no general office to provide these services. Under decentralization separate staffs are allocated to each department for performing those activities which can not be centralized.

Definition


Theo haimann, responsibility is the obligation of a subordinate to perform of the duty as required by his superior.

Me farland, responsibilities are the duties and activities assigned to a position or to an executive.

Advantages of decentralization


A brief explanation of centralization and decentralization is presented below.

1. Saving of time - all paper work relating to the basic operations of the business originate from department officers. Decentralization enables the department staff members to complete the work early.

2. Greater efficiency and output - the workers of particular dept are well versed in technology followed in the dept. hence there is a possibilities of increasing their efficiency the greater efficiency leads to increase in output and minimizing the costs.

3. Maintenance of secrecy - if the secrecy of the business is disclosed, it may make the organization realize a loss. Next, if a separate department is put in charge of the maintenance of secrecy under decentralization the loss may be avoided and secrecy maintained.

4. Department loyalty - the staff attached to particular department for number of ears develop a sense of loyalty to the dept. it results in the increase of output and improvement of the performance of the individual.

Disadvantages of decentralization


1. No proper division of work - the work load of the organization cannot be evenly divided to be given department.

2. Duplication of work - if same type of work is done in more than one department i.e duplication of work, separate machines and equipments are used to perform duplication of work.

3. No standardization - there is no possibility of adopting a standard procedure to perform the same time type of work in all departments. Besides it brings about difficulties in selection and training in each department.

4. Heavy expenditure - a large number of staff members and supervisors are required under this department. It leads to the increase in the cost of operation.

Decentralization


Decentralization is a process of dispersing decision making governance closer to the people or citizen. It includes the dispersal of administration or governance in sector or areas like engineering, management science, political science, political economy, sociology and economics. Decentralization is also possible in the dispersal of population and employment. Law, science and technology advancement lead to highly decentralized human endeavors.

A central theme in decentralization is the difference between a hierarchy based on.

• Authority. Two players in an unequal power relationship and

• An interface. A lateral relationship between two players of roughly equal power.

The more decentralized a system is, the more it relies on lateral relationship, and the less it can rely on command or force. In most branches of engineering and economics, decentralization is narrowly defined as the study of markets and interfaces between parts of a system. This is most highly developed as general systems theory and neoclassical political economy.

Organizational theory


Decentralization also called departmentalization is the policy of delegation decision-making authority down to the lower levels in an organization, relatively away from and lowers in a central authority. A decentralized organization shows fewer tires in the organizational structure, wider span of control, and a bottom to top flow of decision making and flow ideas.

In a centralized organization the decision are made by top executives or on the basis of pre set policies. These decision or policies are then enforced through several tires of the organization after gradually broadening the span of control unit it reaches the bottom tier.

In a more decentralized organization the top executive delegate much of their decision making authority to lower tiers of the organizational structure. As a correlation the organization is likely to run on less rigid policies and wider spans of control among each officers of the organization. The wider spans of control also reduces the number of tires within the organization, giving its structure bottom to top flow of information, allowing all decision among any official of the organization to be well informed about lower tries operations. For example, an experience technician at the lowest tries of an organization might know how to increase the efficiency of the production, the bottom to top flow of information can allow for this knowledge to pass up to the executive officers.

Administrative decentralization


Administrative decentralization seeks to redistribute authority, responsibility and financial resources for providing public services among different levels of governance. It is the transfer of responsibility for the planning, financing and management of public functions from the central government of regional government and its agencies to local governments, semi- autonomous public authorities or corporations, or area wide regional or functional authorities. The three major forms of administrative decentralization—deconcentration, delegation, and devolution—each have different characteristics.

Deconcentration


Deconcentration is the weakest form of decentralization and is used most frequently in unitary states redistributes decision making authority and financial and management responsibilities among different levels of the national government. It can merely shift responsibilities from central government officials in the capital city to those working in regions, provinces or districts, or it can create strong field administration or local administrative capacity under the supervision of central government ministries.

Delegation


Delegation is a more extensive form of decentralization. Through delegation central governments transfer responsibility for decision making and administrative of public functions to semi- autonomous organizations not wholly controlled by the central government, but ultimately accountable to it. Governments delegate responsibility when they creates public enterprises or corporations, housing authorities, transportations authorities, special services special service districts, semi autonomous school districts, regional developments corporations, or special project implementation units. Usually these organizations have a great deal of discretion in decision-making. They may be exempted from constraints on regular civil services personnel and may be able to charge users directly for services.

Devolution


Devolution is an administrative type of decentralization. When governments devolve functions they transfer authority for decision making, finance, and management to quasi-autonomous units to local governments with corporate status. Devolution usually transfers responsibilities for services to local governments that elect their own elected functionaries and councils raise their own revenues and have independent authority to make investment decisions. In a develop system, local governments have clear and legally recognized geographical boundaries over which they exercise authority and within which they perform public functions. Administrative decentralization always underlines most cases of political decentralization.

Span of management


Span of management means the number of people managed efficiently by a single officer in an organization. Many management experts suggested a different number of executive for effective control. According to l. urwick, the ideal number of subordinates is four in case of higher level management and eight to twelve in the case of bottom level management.

Factors affecting the span of management:


1. Character of the supervision work: The span of control may be increased whenever the work is performed and standardized. The reason is that, the supervisor has the opportunities to lay down permanent policies followed in an organization. It results in more number of subordinates.

2. Leadership qualities: The personnel abilities and capacity of a supervisor can influence the span of management. If the supervisor has more skill to control the subordinates, the span of management may be increased and vice-versa.

3. Qualities of the subordinate: If the subordinates have enough talent to perform the work assigned to them, the manager or the supervisor can control more number of subordinates.

4. Time available to supervisor: Most of the executive or supervisors will spend a lot of time for the operating work and administrative duties like planning and organizing activities. The many supervise the subordinates in the remaining available time.

5. Nature of work: Some of the works are respective in nature and does not require any extra-ordinary talent to perform. In such case, the supervisor or the executive can control a large number of subordinates.

6. Level of supervision: Whenever the subordinates perform the work manually, the span of control may be increased. It means that the degree of span of control can be increased at the bottom level management and decreased at the top level management.

7. Fixation of responsibility: In case the responsibility of the subordinate is clearly defined, he need not contact the superior for getting guidance and instruction. Then the superior can supervise large number of subordinate.

8. Using of standards: Standars are used in the organization to detect the errors or false in the performance of work. So, there is no need for an execution to spend more time in watching the performance of the subordinate. Then the executive can control more number of subordinates.

Graicuna's Theory of Span of Management:


The management experts named V.A Graicunas contributed much to the span of management theory. His theory identified the relationship prevailing between the superior and the subordinate. The relationship are classified into three categories they are given below:

1. Direct single relationship
2. Direct group relationship
3. Cross relationship

1. Direct single relationship: Direct single relationship is one in which a supervisor has direct relationship with his subordinates individually. If A supervises B and C who are subordinates, there are two direct single relationships. It is explained with the help of the following chart.

2. Direct group relation: In a group relationship, a supervisor has directed relationship with his subordinates jointly. It is explained with the help of the following chart.

3. Cross relation: In cross relationship, a subordinate has relationship with another subordinate mutually.

I. ORGANIZATIONAL PROCESS


There are basically three types of organization:

1. Functional
2. Project
3. Processes

Processes


- A function is a collection of activities relating to a skill-set, person or institution, frequently referred to as a department.

- A project is a series of related and loosely related one-off tasks designed to produce a one off or small volume output. Implied in project work is the co- ordination of different specialists, in large- scale longer term undertakings.

- A procedure is a sequence of logically related activities, tasks, or procedures with a goal and leading to an outcome. A process can cover a number of people in different functions. In fact is independent of function. An example might be that the accounts functions do credit checking on a new customer, as a part of the sales process according to a procedure.

Process consulting and organizational development

In the process of developing local and regional economies, it is often necessary for organizations or stakeholders to change their role and their activities to improve developmental activities. This could be as simple as adapting a few new projects or activities to support ongoing processes, or it may require fundamental changes in the way organization function and what they focus on.

Many of the company is able to provide process consulting services to these organizations to assist them to develop the human capacities to undertake new activities, and assist them to develop the human capacities to undertake new activities, and assist the organizations to implement development activities. This may require the development of new policies, strategies, knowledge systems and operational plans.

In other cases the organizational development is much simpler and requires an organization to adapt some new instruments or concepts into its work plan, or approach its work in a slightly different way. We have realized that even in these cases, the adoption of new methods and concept should be recognized as a change process that must be managed.

Characteristics of organizational development process


1. Focus on the whole organization - Organization development attempt to develop the whole organization so that it can respond to change effectively. Organizational development is comprehensive programme that is intended to assure that all parts of the organization are well coordinated.

2. System orientation - Organization development is concerned with interactions of various parts of the organization as they effect each other. The basic issue to which it is directed is how do all of these parts work together to be effective? Emphasis is on how the parts relate, not on parts themselves.

3. Use of change agents - Organization development uses one or more change who are people with the role of stimulating and coordinating change with the group. The change agent may be internal and external.

4. Problem solving - Organization development emphasize on solving problems rather than to discuss them theoretical. This focus on real, ongoing problem in the organization.

5. Group processes - Organization development relies on group processes, inter-group conflicts, confrontation and procedures for cooperation. There is an effort to improve interpersonal relations.

6. Feedback - Organization development relies heavily on feedback to participants so that they have concrete data on which to base decisions. Feedback encourage them to understand a situation and take self correcting action.

7. Contingency orientation - Organization development is usually said to be the situational and contingency oriented organizational development is flexible and pragmatic, adapting action to fit particular needs.

8. Team building - General goal of organizational development is to build better teamwork throughout the organization both small and large group team are emphasized. Organization development attempts to tie all groups into one integrated, cooperative group.

Stages in organizational development stages: OD effort progresses through a series of definable stages:

1. IT is a plan change effort involving a diagnosis of the organization development plan for improvement and of resources.

2. Organization wide, the effort is related to total organization change such as change in culture, reward systems.

3. IT is managed from the top. Top management takes interest in the programme and results.

4. It increases organization effectiveness and health. Managers manage their work against goals and tasks. Decisions are made near sources of information. Communication is undistorted.

5. Planned intervention, intervention based on behavioral science are used and these cover ways of work, work culture norms, perception, motivation, relationship and conflict management.

II. ORGANIZATION STRUCTURE AND DESIGN


The right organizational structure can play an important role in an organization’s evolution.

1. Defining organization structure and design.

There are several definitions that must be understood as a precursor to understanding organizational structure and design.

A. Organizing is the process of creating an organization structure.

B. Organization structure is a organization’s framework as expressed by its degree of complexity formalization and centralization.

C. Complexity is defined as the amount of differentiation in an organization.

D. Formalization is a degree to which an organization relies on rules and procedures to direct the behavior of employees.

E. Centralization is defined as the concentration of decision making authority in upper management. Decentralization is the handling down of decision making authority to lower levels in an organization.

F. Organization design is the development or changing of an organization’s structure.

2. Building the vertical dimension of organizations.

A. Unity of command is defined as the principle that a subordinate should have one and only one superior to whom he or she is directly responsible.

1. In the classical view, unity of command was strictly adhered to. In the rare instance when the principle had to be violated, it was clearly designated that there be an explicit separation of activities and a supervisor responsible for each.

2. In the contemporary view, the unity of command principle is viewed as logical when organization is simple. However, if situations warrant, the advantages of flexibility in structure that comes from violating the unity of command principle far outweigh the disadvantages.

B. Authority and responsibility. Authority is defined as a right inherent in a managerial position to give orders and expect them to be obeyed. Responsibility is defined as an obligation to perform assigned activities.

1. In the classical view, authority was a major doctrine. It was viewed as the glue that held organization together. Authority related to one’s position within the organization when authority was delegated, commensurate responsibility had to be allocated.

a. Authority and responsibility needed to be equal.
b. Responsibility cannot be delegated.
c. The contradiction here was answered by recognizing two forms of responsibility operating responsibility and ultimate responsibility.

d. There were also two forms of authority relationship. Line authority is a authority that entitles a manager to direct the work of a subordinate – it follows the chain of command which is the flow of authority from the top to the bottom of an organization and staff authority which is authority that support, assists, and advises holders of the authority.

2. In the contemporary view, we look at the authority is only valid if subordinates are willing to accept it and also at authority as only one element in the larger concept of power.

A. Chester Barnard presented the acceptance theory of authority which proposes that authority comes from the willingness of subordinates to accept it.

1. What determine if subordinates accept orders?

2. According to Barnard, the following condition must be met.

a. They understand the order.
b. They feel the order is consistent with the purpose of the organization.
c. The order doesn’t conflict with their personal beliefs.
d. They are able to perform the task as directed.

B. Power is defined as the capacity to influence decisions.

C. Span of control is defined as the number of subordinates a manager can direct efficiently and effectively.

1. The classical view favored small spans, typically no more than six, in order to maintain close control.

2. The contemporary view established that more and more organization are increasing their spans of control. The span of control is increasingly being determined by looking at various contingency factors.

3. Building the horizontal dimension of organization.

An organization’s structure also has a horizontal dimension that looks at how work activities are organized at each specific level of the organization.

A. Division of labor describes splitting a job into a number of steps with each step being completed by a separate individual.

1. In the classical view of division of labor, the diversity of skills that workers held were efficiently used. Also, division of labor was viewed as an unending source of increased productivity.

2. In the contemporary view, researcher began to recognize that there was a point at which the human diseconomies from division of labor exceeded the economic advantages. These human diseconomies took the form of boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, and high turnover.

B. Departmentalization is another area in which classical and contemporary views differ.

1. In the classical view, activities in the organization had to be specialized and grouped into departments. The approach to grouping selected activities should be the one that best contributes to the attainment of the organization’s objectives and goals. There were five approaches to departmentalizing.

a. Functional departmentalization grouped activities by functions performed.
b. Product departmentalization grouped activities by product line.
c. Customer departmentalization grouped activities on the basis of common customers.
d. Geographic departmentalization grouped activities on the basis of territory.
e. Process departmentalization grouped activities on the basis of product or customer flow.

2. In the contemporary view, most large organizations continue to use most or all of the classical departmental groupings. However, two trends can be noted.

a. Customer departmentalization is becoming increasingly emphasized.
b. Rigid departmentalization is being complemented by the use of terms that cross over departmental lines cross- functional teams.
c. The concept of cross-functional teams evolved from matrix organization which is an organizing approach that assigns specialists from different functional departments to work on one or more projects that are led by a project manager.

4. The Contingency Approach to Organization Design

Classical views of organization design were that the ideal structure design was a mechanistic/ bureaucratic organization. We now recognize that the ideal organization design depends on contingency factors.

A. Mechanistic and organic organizations. Two diverse organizational forms can be described.

1. A mechanistic organization or bureaucracy is a structure that is high on complexity, formalization, and centralization.

2. An organic organization or adhocracy is a structure that is low in complexity, formalization, and centralization.

B. Strategy and structure. Strategy and structure are closely linked, and as strategy changes the structure should also.

C. Size and structure. There is considerable historical evidence that an organization’s size significantly affects its structure.

D. Technology and structure. Every organization uses some from of technology to transform inputs into outputs. Two research studies on the relationship between technology and structure have been significant.

1. Joan Woodward found that three distinct technologies had increasing levels of complexity and sophistication.

a. Unit production describes the production of items in units or small batches.
b. Mass production describes large- batch manufacturing.
c. Process production describes continues process production.

2. Charles per row looked at knowledge technology rather than manufacturing technology be viewed from two dimensions.

a. Task variability describes the number of exception individual encounter in their work.

b. Problem analyzability describes the type of search procedures employees follow in responding to exceptions.

E. Environment and structure. Research has shown that environment is a major influence on structure. We also know that mechanistic organizations tend to be ill- equipped to respond to rapid environmental change.

5. Applications of organization design

There are a number of organizational design options that you might see in today’s organizations.

A. The simple structure is an organization that’s low in complexity and formalization but high in centralization.

1. Its strengths are its flexibility, speed, and inexpensive cost to maintain.

2. Its major weakness is that it’s effective only in small organizations.

B. As an organization grows and as the number of employees rises, the organizational structure tends to become more formalized. It becomes more bureaucratic. There are two options most likely to be used.

1. A functional structure expands the concept of functional departmentalization and creates an organizational design that groups similar or related occupational specialties together.

2. The divisional structure is an organizational structure made up of autonomous, self contained units.

3. However, many contemporary organizations are finding that the traditional hierarchical organizational designs like the functional and divisional structure aren’t appropriate for the increasingly dynamic and complex environments they face.

C. One of the new concepts in organization design is the team-based structure which is an organization structure made up of work groups or teams that performs in that organizations.

D. The final concept in organizational design is the boundary less organization which describes an organization whose design is not defined by, or limited to, the boundaries imposed by a predefined structure.

1. This organization design is also sometimes called the network organization, the modular corporation, or the virtual corporation.

2. What factors have contributed to the development of such an organization design?

a. Increasing globalization of markets and competitors has created the need to respond quickly to changes anywhere in the world.

b. The advances that we’ve seen in technology also have contributed to the development of the boundary less organization.

c. Finally, the need for rapid innovation has contributed to the rise of the boundary less organizational structure.

LINE AND STAFF ORGANIZATION:

Both the line and functional plans prove inadequate in operation. The line system concentrates on authority too much. But purely functional plan also divides it too much. The line and staff system strikes a happy balance between the two.

Under this organization “line” is supplemented by “staff”. The staff refers to offers who are not line managers but are more or less permanently detailed to special service or to the study of some phases of operations. Staff personnel act as an advisory group adjent to the line.

This pattern of organization came into being as a result of the departmental managers having to investigate, think and plan and, at the same time, performing the ordinary tasks of production and selling. Consequently, the work of investigation, research, recording, standardization and advising, i.e., the work of experts, was wholly distinguished and separated from the routine process of manufacturing and selling. Thus, there arose a clear demarcation between ‘thinking’ and ‘doing’; the staff being the thinkers and the line.

MERITS:


1. It adds functional specialists to the pure line organization and thus aims at combining the merits of the two.

2. The stability and discipline of the line organization are preserved, only the specialist is added.

3. It brings expert knowledge to bear upon management. Functional specialists provide advice to the management on wide ranging matters.

4. It brings expert knowledge to bear upon management. Functional specialists provide advice to the management on wide ranging matters.

DEMERITS:


1. The line and staff relationship often leads to numerous friction and jealousies.

2. Line managers may depend too much on staff experts and thus lose much of their judgment and initiative.

3. On the contrary, the staff experts remain ineffective because they don’t get the authority to implement their recommendation.

Organizational Structure


An organizational structure is a mostly hierarchical concept of subordinate of entities that collaborate and contribute to serve one common aim.

Organizations are a number of clustered entities. The structure of an organization is usually set up in one of a variety of styles, dependent on their objectives and ambience. The structure of an organization will determine the modes in which it shall operate and will perform.

Organizational structure allows the expressed allocation of responsibility for different functions and processes to different entities. Ordinary description of such entities is as branch, site, department, work groups and single people. Constructing of individuals in an organizational structure normally is under timely limited work orders or under timely unlimited employment contracts or program orders.

Operational organizations and Informal organizations


The set of organizational structure may not coincide with facts, evolving in operational action such divergence decrease performance, when growing e.g a wrong organizational structure may hamper cooperation and thus hinder the completion of orders in due time and within limits of resources and budgets. Organizational structure shall be adaptive to process requirements, aiming to optimize the ratio of effort and input to output.

An effective organizational structure shall facilitate working relationship between various entities in the organization and may improve the working efficiency within the organizational units. Organization shall retain a set order and control to enable monitoring the processes organization shall support command for coping with a mix of orders and a change of conditions while performing work. Organization shall allow for application of individual skills to enable high flexibility and apply creativity. When an organization comes to age, the flexibility will decrease and the creativity will recovery. If such alteration is prevented by internal or external forces, the final escape is to turn down the organization to prepare for a re- launch in an entirely new set up.

Success factors


Common success criteria for organizational structure are:

• Decentralized reporting
• Flat hierarchy
• High transient speed
• High transparency
• Low residual mass
• Permanent monitoring
• Rapid response
• Shared reliability
• Matrix hierarchy etc.

History


Organizational structures developed from the ancient times of hunters and collectors in tribal organizations through highly royal and clerical power structures to industrial structures and today’s post- industrial structures.

Organizational Structure Types


Pre-bureaucratic structures


Pre-bureaucratic structures lack standardization of tasks. This structure is most common in smaller organization and is best used to solve simple tasks. The structure is totally centralized. The strategic leader makes all keys decision and most communication is done by one on one conversation. It is particularly useful for new (entrepreneurial) business as it enables the founder to control growth and development.

Bureaucratic structures


Bureaucratic structures have a certain degree of standardization. They are better suited for more complex or larger scale organization. They usually adopt a tall structure. Then tension between bureaucratic structures and non-bureaucratic is echoed in burns and stalker distinction between mechanistic and organic structures.

Post-bureaucratic


The term post bureaucratic is used in two senses in the organizational literature one organic and one much more specific. In the generic sense the term post bureaucratic is often used to describe a range of ideas developed since the 1980s that specially contrast themselves with Weber’s ideal type bureaucracy. This may include total quality management, culture management and the matrix organization amongst others. None of these however has left behind the core tenets of bureaucracy. Hierarchies still exist, authority is still Weber’s rational, legal type, and the organization is still rule bound. Heckshcer, arguing along these lines, describes them as cleaned up bureaucracies, rather than a fundamental shift away from bureaucracy. Gideon kunda, in his classic study of culture management at tech argued that the essence of bureaucratic control the formalization, codification and enforcement of rules and regulation- does not change in principle……..it shifts focus from organizational structure to the organization’s culture.

Another smaller group of theorists have developed the theory of the post- bureaucratic organization; provide a detailed discussion which attempts to describe an organization that is fundamentally not bureaucratic. Charles heckscher has developed an ideal type post- bureaucratic. Organization in which decisions are based on dialogue and consensus rather than authority and command, the organization is a network rather than a hierarchy, open at the boundaries in direct contrast to culture management. There is an emphasis on meta- decision making rules rather than decision making rules. This sort of horizontal decision making by consensus model is often used in hosing cooperative and when running a non profit or community organization. It is used in orders to encourage participation and help to empower people who normally experience oppression in groups.

Still other theorists are developing a resurgence of interest in complexity. Theory and organizations, and have focused on how simple structures can be used to engender organizational adaptations. For instance, miner and colleagues (2000) studied how simple structures could be used to generate improvisational outcomes in product development. Their study makes links to simple structures and improvises learning. Other scholars such as Jan riving and sigglekow, and nelson ripening revive an older interest in how structure and strategy relate in dynamic environments.

Functional structures


The functional structure groups employees together based upon the functional of specific jobs within the organization. For example, a division of an internet service provider (IPS) with a functional organizational structure might be as follows.

Vice president

• Sales department (sales function)
• Customer service function
• Accounting department (accounting function)
• Administration department (administration function)

Matrix Structure


Matrix structure groups employees by both function and product. This structure can combine the best of both separate structures. A matrix organization frequently uses teams of employees to accomplish work, in order to take advantage of the strengths, as well as make up for the weaknesses, of functional and decentralized forms. An example would be a company that produces two products, product a and product b using the matrix structure, this company would organize functions within the company as follows, product a sales department, product b customer service department product a accounting, product b sales department, product b customer service department, product b accounting department. Matrix structure is the most complex of the different organizational structures.

• Weak/functional matrix - a project manager with only limited authority is assigned to oversee the cross- functional aspects of the project. The functional managers maintain control over their resources and project areas.

• Balanced/functional matrix - a project manager is assigned to oversee the project. Power is shared equally between the project managers and functional managers. It brings the best aspects of functional and projectilized organizations. However. This is the most difficult system to maintain as the sharing power is delicate proposition.

• Strong/project matrix - a project manager is primarily responsible for the project functional managers provide technical expertise and assign resources as needed.

Organizational Circle. Moving back to flat


The flat structure is common in enterprerial start ups university spin offs or small companies in general. As the company grow, however, it becomes more complex and hierarchical, which leads to an expanded structure, with more levels and departments.

Often, it would result in bureaucracy, the most prevalent structure in the past. It is still, however, relevant in former soviet republics and china, as well as in most government organizations all over the word. Shell group used to represent the typical bureaucracy top – heavy and hierarchical. It featured multiple levels apprehensive to market changes, leading to its incapacity to grow and develop further. The failure of this structure became the main reason for the company restructuring into a matrix.

Starbuks is one of the numerous large organizations that successfully developed the matrix structure supporting their focused strategy. Its design combines functional and product based division, with employees reporting to two heads. Creating a team spirit, the company empowers employees to make their own decisions and train them to develop both hard and soft skills. That makes starbuks one of the best at customer service.

Some experts also mention the multinational design, common in global companies, such as Procter and gamble, Toyota and unilever. This structure can be seen as a complex form of the matrix, as it maintains coordination among products, functions and geographical areas.

In general, over the last decade, it has become increasingly clear that through the forces of globalization, competition and more demanding customer, the structure of many companies has become flatter, less hierarchical, more fluid and even virtual.

Team

One of the newest organizational structures developed in the 20th century is team. In small businesses, the team structure can define the entire organization. Every one of whole foods autonomous profit centre composed of an average of 10 self managed teams, while team leaders in each store and each region are also a team. Larger bureaucratic organizations can benefit from the flexibility of teams as well Xerox, Motorola, and Daimler Chrysler are all among the companies that actively use teams to perform tasks.

Network

Another modern structure is network. While business giants risk becoming too clumsy to protect, act and react efficiently, the new network organization contract out any business functions that can be done better or more cheaply. In essence, managers in network structure spend most of their time coordination and controlling external relations, usually by electronic means. H and M is outsourcing its clothing to a network of 700 suppliers, more than two-third of which are based in low-cost Asian countries. Not owning any factories, H and M can be more flexible than many other retailers in lowering its costs, which aligns with its low- cost strategy.

Boundary less structure

The most radical concept in today’s organizational design is the concept of boundarylessness which seeks to overcome traditional boundaries between layers of management vertical, functional areas horizontal as well as geographical boundaries. Some claim the boundaries structure is a combination of team and network structures, with the additional of temporariness. Ikea, the word’s largest furniture manufacture, has been successful in implementing the boundaryless structure. The company works closely with suppliers by providing technical assistance, leasing them equipment, and giving advice. It also refined the role of the customer, putting responsibility on them to cart the furniture home and assemble it themselves. As a result, the company can offer lower prices, which supports its low-cost focused strategy.

Virtual

A special form of boundaryless organization is virtual. It works in a network of external alliances, using the internet. This means while the core of the organization can be small but still the company can operate globally be a market leader in its niche. According to Anderson, because of the unlimited shelf space of the web, the cost many niche products that collectively they make a significant profit and that is what made highly innovative amazon.com so successful.

As we can see, organizations develop, modify and change their structure so that they align with their strategies. And the main trend for the last decades seems to be coming back to flatter structures. Although this structure this structure seems suitable for small companies only, large organization can take elements of it in harder times. Being at risk of losing profits or even going bankrupt due to the major financial downturn today. A lot of companies are moving to flatter structures. Not only are they unable to maintain multiple management levels any more, they are also in need of a more flexible structure to cope with new threats.

Organization Design


Organizational design involves the certain of roles, processes, and formal reporting relationships in an organization. One can distinguish between two phases in an organization design process strategic grouping, which established the overall structure of the organization, its main sub- units and their relationships and operational design, which defines the more detailed roles and processes. The field is mainly practice- driven and many consulting firms offer organization design assistance to managers. However there is also a substantial academic literature. The most frequently cited book is still Thompson 1967, other key works include Galbraith 1973 and Lawrence and lorsch 1967.

It is important to distinguish between organization design and organization theory. The latter is a descriptive discipline, mainly focusing on describing and understanding organizational functioning design is as the name suggests a more normative, design-oriented discipline that aims to produce the frameworks and tools required to create effective organizations.

Design management in organization involves creating the means to accomplished the stated mission or objective. To design means to function according to a plan. The design establishes the relationships among the various parts of the organization for the system, linking them together and outlining the composite whole. The design includes arranging physical facilities and technological processes to carry out production and auxiliary activities. It is also determines the nature of the task, the job, or the work to be performed by the people in the organization. Therefore the design must consider the network of communication that will unite technology, structure, and people into a coordinated effort, a total system.

The design of a new organization is only the first phase of the design function. The scope of system design also covers the function of redesign which implies assessing the existing system to improve its effectiveness and efficiency.

Line and Staff relationship


The problem of line and staff is concerned with deciding about the kind of authority to be allocated and the nature of authority relations to be established in the organization. In spite of much confusion about these two concepts, line and staff relationship are important for proper understanding of the organization. An enterprise is organized for some specific purpose and line functions are commonly described as those which have direct responsibility for accomplishing enterprise objectives. Line is then identified by the objectives of the company. However it may be mentioned that functions which are termed as line in one company may not be so in the other company and that all depends on the importance of the activities and the nature of the business of the organization.

Urwich has pointed out the limitation of describing staff as purely advisory in nature particularly when applied to the general staff. The staff in real life does much more than merely advising the line. His additional activities are:

1. Framing procedures, regulation and sometimes policies to be issued to line personnel in the name of some top line superior.

2. Interpreting plans and selling them to line personnel.

3. Rendering help to line superior and their subordinates by supplying them adequate information on the working of plans, and

4. Reporting to the superior on the extent of compliance by line subordinates with staff advice.
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Review Questions
  • 1. Explain briefly any one Hawthorne experiment phase.
  • 2. Explain the Neo-Classical organization theory.
  • 3. Explain the different levels of management.
  • 4. Explain various types of authority.
  • 5. What do you understand by Delegation of Authority.
  • 6. What is an Organizational Manual.
  • 7. Explain the different bases of Departmentation.
  • 8. State the reasons for Line and Staff Conflict. How is it resolved?
  • 9. Discuss the various kinds of Training Methods in Management.
  • 10. What is meant by tall structure?
  • 11. What is an organization manual?
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