Organizational Structure PDF

PROFESSIONAL PRACTICE Organisational Structure  Organisational Structure An organizational structure is a system that outlines how certain activities are directed in order to achieve the goals of an organization. These activities can include rules, roles, and...

PROFESSIONAL PRACTICE Organisational Structure  Organisational Structure An organizational structure is a system that outlines how certain activities are directed in order to achieve the goals of an organization. These activities can include rules, roles, and responsibilities. The organizational structure determines how information flows between levels within the company. A successful organizational structure defines each employee's job and how it fits within the overall system. 2 Types of Organisational Structures – Centralised and Decentralised  Centralised Organisational Structure All decisions, as well as processes, are defined; and handled by the top management. Employees and managers are responsible for the successful implementation of decisions and have to follow them. The employees low in the chain of command play a minimal role in the process of decision-making. The centralized structure has a top-down approach for decision flow. Examples – Military, Flipkart, Apple, McDonalds  Decentralised Organisational Structure Day-to-day tasks and the decision-making processes are delegated to the supervisors at the middle and lower level by the top management for fast and effective decisions and to improve efficiency. By letting the middle and lower level executives in the process of decision-making, the top management can focus on other major decisions. This also increases the responsibility and accountability of the employees. Examples – Startup companies, Technology based companies  Elements of Organisational Structure Importance of Organisational Structure It is important to look for organizational design and structure as per a company’s requirement. There A well-designed organizational structure not only are 6 elements of organizational design and defines functions, hierarchy, roles, and structure: responsibilities but also the alignment of organizational goals of staff/teams. Poor 1. Line/ Chain of Command organizational design or structure may result in 2. Span of Control serious downfalls in organizations i.e. ambiguity of 3. Type of structure – Centralised/ roles, lack of trust in team and superiors, rigid work Decentralised environment, slow and ineffective decision-making, 4. Specialisation etc. The above-mentioned factors are further 5. Formalisation responsible for low productivity and turnover. 6. Departmentalisation 1. Line/ Chain of Command The authority and power are delegated from top to bottom i.e. in an organization top management gives instructions to the bottom team and all the employees at each level. Further, the accountability of an employee’s job flows upward to the management. It gives clarity of the reporting structure in an organization. 2. Span of Control “Span Of Control” demonstrates how wide is the area of the direct control of supervisors over their subordinates which is directly related to how many subordinates (in numbers) report to a senior or supervisor; which, in turn, depends on the number of tasks performed at different levels. In case of more tasks, the span of control will be wider. It also depends on other aspects like geographical location, the ability of the team and superior, the complexity of tasks, etc. 3. Type of Structure Centralised Decentralised 4. Specialisation Large organizations divide some of its functions based on the specialized areas and, so, subtasks are defined in different tasks. These subtasks are distributed among individual job roles. 5. Formalisation Formalization refers to the process of specifying A formal organization emphasizes on job roles, or mentioning rules, procedures, and duties to the responsibilities, and assigning work to the employees as an individual as well as to the individuals as per the requirement of roles. These teams, departments, units, and the whole are controlled by rules and procedures. organization by managers in written form too. Formalization indicates the goals and vision of an organization, tasks, hierarchy and relationships, authority and responsibilities, different processes, and work methods. 2 types of formalisation – Formal & Informal An informal organization emphasizes on individuals, and the job responsibilities are designed Formal organization based on individual employee skills and preferences irrespective of the department in which he/she is working. An individual can be assigned the role of different departments as well based on self-interest, skills, etc Informal organization 6. Departmentalisation Departmentalization is the process of dividing organizational functions into different departments as per specializations of jobs or responsibilities so that the common tasks can be handled by specialized teams. In rigid departmentalization, there is almost no interaction between different teams and each team works as per their area of specialization. In contrast, in loose departmentalization, the teams are free to interact with each other and can work together for common tasks.