Organization and Organization Structure - PoM Mod 3 PDF

ORGANIZATION AND ORGANIZATION STRUCTURE PoM Mod 3 Organizing Process Organizing is the formal grouping of activities and resources for facilitating the attainment of specific organizational objectives Organising ensures that objectives are achieved in the shortest poss...

ORGANIZATION AND ORGANIZATION STRUCTURE PoM Mod 3 Organizing Process Organizing is the formal grouping of activities and resources for facilitating the attainment of specific organizational objectives Organising ensures that objectives are achieved in the shortest possible time, in an orderly manner, with maximum utilization of the given resources As a Management Function Organising refers to the proces involving the identification and grouping of activities to be performed, defining, and establishing the authority, responsibility, relationships etc. The end result of organising is the creation of a structure of duties and responsibilities of people in different positions, grouped according to the similarity and interrelated nature of activities The Bottom Line In essence, the outcome of the organising process is an ‘Organisation’ consisting of a group of people working together for the achievement of one or more common objectives Stoner, Freeman, and Gilbert At an organisation, two or more people work together in a structured way to achieve a specific goal or set of goals. Organisation is a conglomerate of multiple number of persons; Relationship among people working together is defined through a structure Organisation strives to achieve planned goal/s Goal is one of the fundamental elements of an organisation Robbins An organization is a consciously coordinated social entity, with a relatively identifiable boundary, that functions on a relatively continuous basis to achieve a common goal or set of goals Affairs at an organization are properly managed Organisation works within a flexible yet definable boundary Brown and Moburg Organisations are relatively permanent social entities characterised by goal-oriented behaviour, specialisation, and structure Though many changes might be taking place within the organisation- continuity is at the core of existence of any organisation Goals remain an integral part of any organisation Organisations need highly specialised skills to attain goals In order to bring together various work activities, organisations need to have structures Organisation - Characteristics Group of people: An Organisation comes into existence when a group of people combine their efforts for some common purpose and willingly contribute towards their common endeavor Division of work: Setting up of an organisation involves division of the total work into various activities and functions, and assigning the tasks to different persons according to their skill, ability and experience Organisation - Characteristics Common purpose: Every organisation comes into existence on the basis of goals of the enterprise which are separate from the personal goals of the people employed It is the common purpose of the organisation which provides the basis of co-operation among the members of the organisation  Organisation - Characteristics Vertical and horizontal relationships: An organisation creates cooperative relationship between different departments and divisions as well as between superiors and subordinates Different functions and activities like production, marketing, financing etc. are integrated for the achievement of proper coordination The duties and responsibilities of superiors and subordinates in each department or division are also unified so as to serve the purpose of their joint efforts Organisation - Characteristics Chain of command: The superior-subordinate relationships established in an organisation are based on the authority which flows from the higher levels of management to the next lower levels, thereby forming a hierarchical chain The chain of command also determines the line of communication Organisation - Characteristics Dynamics of organisation: Besides the structural relationships among people which are based on their activities and functions, there exist an organising interactions based on sentiments, attitudes and behavior of individuals and groups These aspects of relationship provide a dynamic element to the organisational functioning They are subject to change from time to time The Organisation Process Determination of Objectives Organisation is always related to certain objectives It will help the management in the choice of men and materials with the help of which it can achieve its objectives Objectives also serve as the guidelines for the management and the workers They will bring unity of direction in the organisation The Organisation Process Identification and Grouping of Activities Each job should be properly classified and grouped For instance, production, purchasing, marketing, and financing, and each such function is further subdivided into various jobs The jobs then may be classified and grouped to ensure the effective implementation of the other steps The Organisation Process Allotment of Duties After classifying and grouping the activities into various jobs, they should be allotted to the individuals so that they could perform them effectively Each individual should be given a specific job to do according to his ability and made responsible for that He should also be given the adequate authority to do the job assigned to him The Organisation Process Developing Relationships Since so many individuals work in the same organisation it is the responsibility of management to lay down structure of relationships in the organisation Everybody should clearly know to whom he is accountable This will help in the smooth working of the enterprise by facilitating delegation of responsibility and authority The Organisation Process Integration of these Groups of Activities: (a) through authority relationships – horizontally, vertically, and laterally and (b) through organized information or communication systems, i.e., with the help of effective coordination and communication We can achieve unity of objectives, team work and team spirit by the integration of different activities PRINCIPLES OF ORGANISATION Unity of Objectives An enterprise strives to accomplish certain objectives. The organisation and every part of it should be directed towards the attainment of objectives Every member of the organisation should be familiar with its goals and objectives There must be unity of objective so that all efforts can be concentrated on the set goals The principle requires objectives to be clearly formulated and well understood PRINCIPLES OF ORGANISATION Division of Work and Specialisation The entire work in the organisation should be divided into various parts so that every individual is confined to the performance of a single job This facilitates specialization which in turn leads to efficiency and quality However, each area of specialisation must be interrelated to the total integrated system by means of coordination of all activities of all departments PRINCIPLES OF ORGANISATION Definition of Jobs Every position in the organisation should be clearly defined in relation to other positions in the organisation The duties and responsibilities assigned to every position and its relationship with other positions should be so defined that there is no overlapping of functions. PRINCIPLES OF ORGANISATION Separation of Line and Staff Functions Whenever possible, line functions should be separated from staff activities Line functions are those which accomplish the main objectives of the company. In many manufacturing companies, the manufacturing and sales departments are considered to be accomplishing the main objectives of the business and so are called the line functions Other functions like personnel, plant maintenance, financing and legal are considered as staff functions PRINCIPLES OF ORGANISATION Chain of Command or Scalar Principle There must be clear lines of authority running from the top to the bottom of the organization The organization structure should facilitate delegation of authority From the chief executive, a line of authority may proceed to departmental managers, to supervisors or foremen and finally to workers PRINCIPLES OF ORGANISATION Parity of Authority and Responsibility or Principle of Correspondence Responsibility should always be coupled with corresponding authority This principle suggests that if a plant manager in a multiplant organisation is held accountable for all activities in his plant, he should not be subject to seek orders from company headquarters for his day to day activities PRINCIPLES OF ORGANISATION Unity of Command No one in the organisation should report to more than one line supervisor Everyone in the organisation should know to whom he reports and who reports to him PRINCIPLES OF ORGANISATION Unity of Direction According to this principle a group of activities that have a common goal should be managed by one person There should be one head and one plan for a common objective of different activities PRINCIPLES OF ORGANISATION Exception Principle This principle suggests that higher level managers should attend to exceptional matters only All routine decisions should be taken at lower level, whereas problems involving unusual matters and policy decisions should be referred to higher levels PRINCIPLES OF ORGANISATION Span of Supervision The term ‘span of supervision’ means the number of persons a manager or a supervisor can direct No manager should be required to supervise more subordinates than he can effectively manage within the limits of available time and ability The exact number may vary according to the nature of the job and the frequency of intensity of supervision needed. PRINCIPLES OF ORGANISATION Principle of Balance There should be proper balance between various parts of the organisation and no function should be given undue importance at the cost of others Balance should be maintained also between centralisation and decentralisation, span of supervision and lines of communication, and authority allocated to department and personnel at various levels PRINCIPLES OF ORGANISATION Communication A good communication network is essential to achieve the objectives of an organisation No doubt the line of authority provides channels of communication downward and upward, still some blocks in communication occur in many organization The confidence of superior in his subordinates and two-way communication are the factors that unite an organisation into an effectively operating system PRINCIPLES OF ORGANISATION Flexibility The organisation structure should be flexible so that it can be easily and economically adopted to the changes in the nature of business as well as technological innovations Flexibility of organization structure ensures the ability to change with the environment without disrupting the basic design. PRINCIPLES OF ORGANISATION Continuity Many changes take place outside the organization These changes must be reflected in the organization For this purpose the form of organisation structure must be able to serve the enterprise to attain its objective for a long period of time. Span Of Management The number of subordinates or employees that a manager or supervisor may effectively supervise and handle is referred to as the span of management, also known as the span of control The span of management can vary greatly based on the size, kind, and management style of an organization Narrow Span of Management This occurs when a manager or supervisor has a relatively small number of subordinates reporting to them In a narrow span of management, there are fewer employees under the direct supervision of a single manager This may allow for closer and more personalized supervision, but it can also result in a hierarchical and bureaucratic organizational structure, which can be less efficient in large organizations Wide Span of Management A wide span of management involves a manager or supervisor overseeing a larger number of subordinates This approach can lead to a flatter organizational structure, with fewer layers of management between top-level management and front-line employees It is often seen in organizations that emphasize decentralization and employee empowerment Influencing Factors The nature of the work: complex or specialized tasks may require a narrower span of management, while routine or repetitive tasks may allow for a wider span Managerial skills: managers with strong leadership and delegation skills can handle a wider span of control Influencing Factors Technology and communication tools: advances in technology, such as project management software and communication platforms, have made it easier for managers to oversee larger teams Organizational culture and style: some organizations have a preference for a flatter structure and a wider span, while others may prefer a more traditional, hierarchical approach Organization Chart It is a diagram showing graphically the relation of one official to another, or others, of a company. It is also used to show the relation of one department to another, or others, or of one function of an organization to another, or others This chart is valuable in that it enables one to visualize a complete organization, by means of the picture it presents Hospital IT Company Uses 1. It assigns responsibilities to individuals 2. It helps identity control properly 3. Makes the management functions simpler 4. Serve as a framework of budgeting and scheduling 5. Helps to give sense of security 6. Outline fundamental relationships Uses 7. Outlines basic authority 8. Serve as basic for directives 9. Helps to improve communication channels 10.It can be referred as reference document for various purposes. Benefits 1. It shows organizational activities and identifies persons responsible for them 2. It indicates clear reporting relationships pointing out who is accountable to whom 3. It identifies scope and limit at the job explaining tasks to be performed at each position 4. It tells about the inter – relationship of positions 5. It helps to resolve complexities within organization 6. It can be used to introduce organizational relationships to new employees Limitations 1. It does not represent human relationship between superior and subordinates 2. It can introduce obstacles in relationships 3. It shows only formal authority relationships and omits many significant informal and informational relationships 4. It does not provide as to the authority existing at any point in the structure 5. For any changes in hierarchy or creation of new position results in recognizing the chart Hierarchical Organizational Chart It is the most common type of organization chart A hierarchy is where one group or person is at the top, while those with less power are beneath them, in the shape of a pyramid With a hierarchy, members typically communicate with the person they report to and anyone who reports directly to them This gives guidance for information flow but can also limit your ability to effect change Matrix Organisational Chart It is a rarer type and usually only seen when individuals have more than one manager This structure can lead to increased communication and cooperation between departments, but it can also lead to conflicts of interest Matrix Organisational Chart FLAT ORGANIZATIONAL CHART Sometimes referred to as a horizontal org chart, has little or no levels of middle management and typically consists of two levels—the top administrators and the workers In companies like this, the workers have more responsibility and are more directly involved in decision-making Flat Organisational Chart FACTORS AFFECTING ORGANIZATIONAL CHART Size of the organization The number of employees and the organization's overall size can significantly influence the organizational chart Smaller organizations may have simpler, flatter structures, while larger organizations may have more hierarchical and complex charts FACTORS AFFECTING ORGANIZATIONAL CHART Nature of the work The type of work an organization does can shape its structure Organizations with specialized and diverse functions may require more complex structures, while those with a single core function may have simpler structures FACTORS AFFECTING ORGANIZATIONAL CHART Industry and sector The industry in which an organization operates can affect its structure For example, manufacturing companies may have distinct hierarchies, while creative agencies may have more flexible, project-based structures FACTORS AFFECTING ORGANIZATIONAL CHART Organizational goals and strategy The strategic objectives of the organization play a significant role in determining the structure For example, a company focused on innovation and rapid product development may have a flatter structure to encourage collaboration. FACTORS AFFECTING ORGANIZATIONAL CHART Cultural and historical factors The organization's history and culture can influence its structure. Some organizations maintain traditional hierarchies, while others embrace more contemporary, collaborative approaches FACTORS AFFECTING ORGANIZATIONAL CHART Technology and automation Advances in technology can influence organizational structure Organizations that heavily rely on digital technologies or automation may require a different structure to support these functions TYPES OF ORGANIZATION STRUCTURE 1. LINE ORGANISATION 2. LINE AND STAFF ORGANISATION 3. FUNCTIONAL ORGANISATION 4. PROJECT ORGANISATION 5. MATRIX ORGANISATION 6. VIRTUAL ORGANISATION LINE ORGANISATION The simplest and also the oldest organisation structure Also known as military or departmental type of organisation The authority is well defined and it flows vertically from the top of the hierarchy level to the managerial level and subordinates at the bottom and continues further to the workers till the end There is a clear division of accountability, authority and responsibility in the line organisation structure Advantages of line organisation 1. Simple structure and easy to run 2. Instructions and hierarchy clearly defined 3. Rapid decision making 4. Responsibility fixed at each level of the organisation Disadvantages of line organisation 1. It is rigid in nature 2. It has a tendency to become dictatorial. 3. Each department will be busy with their work instead of focusing on the overall development of the organisation LINE AND STAFF ORGANISATION It is an improved version of the line organisation In line and staff organisation, the functional specialists are added in line The staff is for assisting the line members in achieving the target effectively Advantages of line and staff organisation 1. Easy decision making as work is divided. 2. Greater coordination between line and staff workers. 3. Provides workers the opportunity for growth. Disadvantages of line and staff organisation 1. Conflict may arise between line and staff members due to the improper distribution of authority 2. Staff members provide suggestions to the line members and decision is taken by line members, it makes the staff members feel ignored FUNCTIONAL ORGANISATION A type of organisation where the task of managing and directing the employees is arranged as per the function they specialize In a functional organisation, there are three types of members, line members, staff members and functional members Advantages of Functional organisation 1. Manager has to perform a limited number of tasks which improves the accuracy of the work 2. Improvement in product quality due to involvement of specialists Disadvantages of Functional organisation 1. It is difficult to achieve coordination among workers as there is no one to manage them directly 2. Conflicts may arise due to the members having equal positions PROJECT ORGANISATION A project organisation is a temporary form of organization structure that is formed to manage projects for a specific period of time This form of organisation has specialists from different departments who are brought together for developing a new product Advantages of project organisation 1. The presence of many specialists from different departments increases the coordination among the members 2. Each individual has a different set of responsibilities which improves control of the process Disadvantages of project organization 1. There can be a delay in completion of the project (due to social loafing) 2. Project managers may find it difficult to judge the performance of different specialists MATRIX ORGANISATION The latest form of organisation that is a combination of functional and project organisation There are two lines of authority, the functional part of the organisation and project management part of the organisation and they have vertical and horizontal flow of authority, respectively Advantages of Matrix Organisation 1. Since the matrix organisation is a combination of functional and project management teams, there is an improved coordination between the vertical and horizontal functions 2. Employees are motivated as everyone will be working towards one project Disadvantages of matrix organisation 1. Due to the presence of vertical and horizontal communication, there will be increased cost and paperwork 2.Having multiple supervisors for the workers leads to confusion and difficulty in control Matrix Organisation TYPES OF ORGANISATION 1. Formal organisation 2. Informal organisation Formal organisation A type of organisation structure where the authority and responsibility are clearly defined The organisation structure has a defined delegation of authority and roles and responsibilities for the members The formal organisation has predefined policies, rules, schedules, procedures and programs The decision making activity in a formal organisation is mostly based on predefined policies. Formal organisation Formal organisation structure is created by the management with the objective of attaining the organisational goals. Informal Organisation The informal organization is defined as a network of social and personal relationships that occur in a work environment It is a fact that an informal organization co-exists with a formal one Informal organizations emerge from the interaction or communication between employees irrespective of their designations and hierarchies Informal Organisation It runs parallel to a formal organization. DIFFERENCE BETWEEN FORMAL AND INFORMAL ORGANIZATION A formal organization is created by the management deliberately, whereas an informal organization is created spontaneously by members Formal organizations are stable and run long, but informal groups are unstable The purpose of a formal organization is to accomplish its organizational goal, as opposed to an informal organization, which fulfills the psychological and social needs of its members. In a formal organization, the job of a member is clearly defined by the management and is held accountable to the organization. This is in contrast to an informal organization, which is formed based on interpersonal relationships and has no defined responsibilities or roles. DIFFERENCE BETWEEN FORMAL AND INFORMAL ORGANIZATION Formal organizations are bound by hierarchies, but informal group members are equal. In formal organizations, the focus is on work performance, whereas in informal ones, it’s interpersonal relationships Rules and regulations are well-defined in a formal organization, while informal organizations have their norms, beliefs, and values The size of formal organizations is large when compared to informal organizations, which are small CHARACTERISTICS OF FORMAL ORGANIZATION Clear structure: formal organizations have a defined structure with a hierarchy of roles and positions. There is typically an established chain of command, with clear lines of authority and responsibility Specific goals and objectives: formal organizations are created with specific goals and objectives in mind. These goals guide the organization's activities and decision-making processes Division of labor: work within a formal organization is typically divided among different roles and positions. Each individual has a specific set of tasks and responsibilities, contributing to the overall functioning of the organization CHARACTERISTICS OF FORMAL ORGANIZATION Rules and procedures: formal organizations have established rules, policies, and procedures that govern how activities are carried out. These rules help maintain order, consistency, and fairness within the organization Impersonal relationships: relationships within formal organizations are often more impersonal and task-oriented, with a focus on achieving organizational goals rather than personal connections Specialization: formal organizations often employ individuals with specialized skills and expertise to perform specific functions or tasks related to the organization's goals Hierarchical authority: there is a clear hierarchy of authority, with top-level management making important decisions and lower-level employees following their directives IMPORTANCE OF FORMAL ORGANIZATION Goal achievement: formal organizations provide structure and coordination, allowing individuals to work together efficiently to achieve common goals. This is especially important in businesses, where employees need to collaborate to meet organizational objectives Clear hierarchy: formal organizations establish clear lines of authority and responsibility, which helps in decision-making and accountability. This hierarchical structure ensures that tasks are assigned, monitored, and completed effectively IMPORTANCE OF FORMAL ORGANIZATION Resource allocation: formal organizations facilitate the allocation of resources, such as finances, personnel, and equipment, to meet specific objectives. This helps in optimizing resource utilization and avoiding waste Specialization: in a formal organization, roles and responsibilities are well-defined, allowing individuals to specialize in their areas of expertise. This specialization increases efficiency and productivity as employees can focus on tasks suited to their skills IMPORTANCE OF FORMAL ORGANIZATION Decision-making: formal organizations have established procedures and processes for decision-making. This ensures that decisions are made rationally, based on information and data, rather than on a whim, personal bias, or emotions Accountability: formal organizations create a system of accountability, where individuals are responsible for their actions and outcomes IMPORTANCE OF FORMAL ORGANIZATION Stability and continuity: formal organizations provide stability and continuity, as they are not dependent on any single individual. Even if key personnel change, the organization can continue to function and pursue its goals Efficiency and productivity: by establishing formal processes, roles, and responsibilities, organizations can operate more efficiently. This leads to increased productivity and the ability to achieve more with fewer resources LIMITATIONS OF FORMAL ORGANIZATION Rigidity: formal organizations tend to be structured with rules, regulations, and hierarchies. This rigidity can stifle creativity and innovation and make it challenging to adapt to rapidly changing circumstances Communication barriers: hierarchies in formal organizations can create communication barriers between different levels of management and staff. This can lead to miscommunication, misunderstanding, and a lack of transparency Impersonal relationships: the formal nature of these organizations can result in impersonal relationships between employees, which may affect teamwork, collaboration, and employee satisfaction LIMITATIONS OF FORMAL ORGANIZATION Overemphasis on rules and procedures: in a formal organization, adherence to rules and procedures is often prioritized over common sense and creativity. This can limit the ability to address unique or exceptional situations effectively Lack of customer focus: in some cases, formal organizations may become more focused on internal processes and regulations than on meeting customer needs and expectations AMAZON (1994) Amazon is a global technology corporation with expertise in artificial intelligence, cloud computing, digital streaming, and e-commerce. Amazon's mission is to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online. Organisation Structure Organisational Structure Amazon follows a tall hierarchical corporate structure. That means the organisation implements top-down control elements used on their workforce, working at different units and levels. There are three key components of Amazon's organisational structure: Key Components A global hierarchy - This means that Amazon's CEO Jeff Bezos makes strategic decisions and has control over the entire organization All senior executives have to report directly to the CEO, which allows Jeff Bezos to be in direct control of all the organisation in terms of its functions, product lines, divisions, and service Key Components Global groups based on functions - Amazon structures the organisation in a way that senior-level executives make up an independent group which in turn are in charge of each specific function The direct control and division of each function ensure smooth and effective operations Key Components Geographical divisions have their subdivisions - Amazon's organisational structure incorporates geographical divisions based on physical locations This structure assists the company in addressing and solving issues that occur in particular geographical regions Netflix (1997) Netflix is a multinational entertainment company that specializes in streaming television series, films, and documentaries Netflix's mission is to entertain the world, creating content that appeals to diverse audiences around the globe Organisational Chart Key Components Functional Groups are based on business functions, such as human resource management, which in Netflix’s corporate structure is called “Talent.” The hierarchy in the online company’s structural system is based on these groups. For example, strategic initiatives from Netflix’s CEO are disseminated downward through vertical lines of authority and communication Key Components Despite this hierarchical design, the company’s organizational structure is relatively flat because of the minimized levels of middle management, enabling the business organization to rapidly respond to changes in the entertainment industry This flatness is related to Netflix Inc.’s corporate culture, which promotes open communication and cooperation, despite the unitary and hierarchical nature of the corporate structure. Key Components Top executives at the corporate headquarters provide the strategic management decisions for the entire organization’s streaming operations. Netflix’s organizational structure has the following main functional groups or offices: CEO Legal Talent Finance Product Content Communications Key Components Geographical divisions in Netflix’s organizational structure enable strategic management specific to regional market characteristics. The online entertainment company addresses strategic challenges in marketing through the support of its corporate structure. For example, Netflix develops its advertising campaigns with this organizational structural aspect in mind. These geographic segments reflect the multinational market trends that are most significant to the company’s strategic plan for growing its member base, in terms of aligning marketing strategies to target customers’ entertainment preferences. The SWOT analysis of Netflix Inc. enumerates some of the strengths and competitive advantages that the corporation uses to effectively compete in these markets Key Components The on-demand digital content streaming company’s corporate structure has the following divisions for its operating segments: Domestic Streaming International Streaming Key Components Divisions for products and operations are a corporate structural aspect that represents the two main types of outputs in Netflix Inc.’s business model: original programming and other content The company’s organizational structure is more closely associated with “other content,” considering that the online platform distributes or streams such content However, original programming operations are a major factor in Netflix’s corporate structure, as the business attracts customers and generates revenues through its original TV series and movies Key Components The strategic objective of these organizational structural divisions is to achieve operational effectiveness in separately managing content distribution and content production In summary, the following divisions are an aspect of Netflix’s corporate structure: Original Programming Other Content Key Points on Netflix’s Corporate Structure Netflix Inc.’s organization is a structural framework that prioritizes executive control from the company headquarters, as evident in the unitary form of the corporate structure The online business ensures flexibility based on the flatness of this organizational structure. In addition, with geographical divisions, Netflix achieves marketing effectiveness through its organizational design This structural analysis case also shows that the corporate structure supports strategic management for content distribution (via Other Content) and content production (via Original Programming) As a result, Netflix’s organizational structural system has evolved to accommodate original programming. As original content production increases, so does the significance of the Original Programming division in the company’s corporate structure IBM (1911) IBM is a multinational technology company that provides hardware, software, and consulting services to businesses and governments around the world IBM's mission is to help clients leverage the power of technology to drive innovation, transform their businesses, and create new opportunities for growth Organisational Chart Organisational Structure IBM's organizational structure is a matrix structure, which combines elements of both functional and divisional structures The company is organized into several business units, each of which focuses on a specific product line or service offering These business units are grouped into three main divisions: Cloud and Cognitive Software, Global Business Services, and Systems Under each division, IBM has functional departments such as finance, human resources, and legal that support the entire organization Additionally, IBM has a global matrix structure where employees belong to both their business unit and a specific functional department, such as research or development