Organizing

Organization
• What is Organization?
• A structured and coordinated group of individuals or
entities working together to achieve common goals or objectives.
Organizing
• Hindustan Aeronautical Limited
• Amul
• Ola electric

• All the organizations need to get work done; using a different

organization structure.
Organizing
• Organizing is the function of management that creates the
organization structure.

• Developing or changing organization’s structure is known as

organization design
Organizational Structure
• How specialized job should be?
• Rules to guide employee behaviour?
• Decisions at what level to be taken?
Organizational Structure
• Changing environment
• Organizations need to adapt
• Future ready
• Topic has undergone much changes
• Managers to re-evaluate
Organizational Structure
• Bureaucracies don’t work?
• Have organizations evolved beyond mechanistic structures?
• Characteristics are adopted at multiple organizations
• Mostly medium and large sized organization
• Specialization,
• Formal Rules,
• Clear Chain of command,
• Departmentalization
Elements of Organization Structure
• i. Work specialization
• Doing Part of an activity rather doing the entire process
Elements of Organization Structure
• Work specialization
• EOicient use of skill
• Pay based on skills
• Increase in productivity
Elements of Organization Structure
• Work specialization
• Increase in productivity-
• Specialization vs Broad
range of tasks
Elements of Organization Structure
• Departmentalization
• How the jobs are grouped together
Departmentalization
i. Functional Departmentalization:
• Grouping activities on functions performed
• Eg.
• Sales
• Human Resource
• Operations, etc.
Departmentalization
ii. Product Departmentalization:
• Based on various product
• Eg.
• Pre-sales
• Service
• Workshop, etc
Departmentalization
iii. Customer Departmentalization:
• Based on Customer reach
• Eg.
• Gmail
• Google workspace etc.
Departmentalization
• iv. Geographical Departmentalization:
• Based on Geography or territoty
• Eg.
• India
• Asia
• Middle East, etc.
Departmentalization
• v. Process Departmentalization:
• Based on work or customer flow
• Eg.
• Driving License
• Bank, etc.
Elements of Organization Structure
• Cross-functional teams
• Team of Individuals from various departments
• Crossing traditional departmental lines
Authority and Responsibility
• Who do I report to?
• Who would resolve this problem?
Authority and Responsibility
• Authority
• The rights inherent in a managerial position to give orders and
expect the order to be obeyed.
• Early management viewed it as a glue that holds organization
together.
Authority and Responsibility
• Authority
• Can it be delegated downwards?
• Each position has specific inherent rights and incumbents
acquired from the rank/title
• Authority is related to ones position within the organization
Authority and Responsibility
• Responsibility
• When managers delegate authority, they must allocate
commensurate responsibility
Authority and Responsibility
• Responsibility
• With rights, corresponding obligation to perform
• Accountability for performance
• Lack of responsibility will result in abuse.
Authority
• Line Authority
• Authority that entitles a manager to direct work of an employee
Chain of Command and line Authority
Authority
• Staff Authority
• Positions with some authorities that have been created to
support, assist and advise those holding line authority
Line and Sta> Authority
Unity of Command
• What if an employee reports to two or more bosses?
• Conflicting demand and priorities?
Unity of Command
• Each employee should report to only one manager
• Early management view
• Organizational information relatively easy to access nowadays
• Adherence to unity of command results in inflexibility and hinders
organizations performance
Relevance of Authority
• Early assumption:
• Rights inherent in the one’s formal position were the sole source
of influence
• Organizations were simpler
• Staff was less important
• Managers were all powerful
• Influence is same as authority
Relevance of Authority
• Power: Individual’s capacity to influence decisions
• Now power is not perfectly correlated with level
• Organizations were simpler
• Authority is one element in the larger concept of power
Authority and Power
• Authority is the legitimate power or right granted to an individual,
position, or entity to exercise control, make decisions, and
enforce compliance within a specific domain or scope
• Power is the capacity of managers or leaders to exert influence,
make decisions, and achieve desired outcomes within an
organization
Authority and Power
Authority and Power
• Cone analogy of organization:
• The higher you move in an organization, the closer you move to the
power cone
• Authority not necessary to wield power,
• as you can move horizontally towards power cone
French and Raven’s 5 sources of Power
Span of Control
• How many employees can a manager efficiently and effectively
supervise?
• Early Management favored small spans- typically not more than
six; to maintain control
• Level of organization also a variable
Span of Control
• Recent change in theories on effective spans of control
• Efforts to increase span of control to save time in decision making
• Many organizations increasing span of control
• Span of control is determined through contingency variables
Span of Control
• It depends on:
• Employee experience and training
• Similarity of employee task
• Complexity of tasks
• Physical proximity of employees
• Amount and type of satandardized procedure
• Sophistication of organization’s MIS
• Strength of organizations value system
• Preferred managing style of the manager
Centralization and Decentralization
• At what levels are decisions made?
• Centralization is the degree to which the decisions are made at
upper levels of organization
• Decentralization is the degree to which the lower-level manager
provide input or make decision
• Not a either-or concept
• Degree
Centralization and Decentralization
• Earlier Pyramid structure of organizations with power and
authority at top
• Centralized decision were prominent
• Organizations today are more complex and responsive to dynamic
change in environment
• Balance to allow managers to best implement decision and
achieve org goals
• Delegation of authority to employees to make decisions that
effect their work
Formalization
• How standardized an organization’s jobs are and
• The extent to which employee behavior is guided by rules and
regulations
• Highly formalized organization- explicit job descriptions,
numerous organization rules, clearly defined procedures covering
work process
• Little freedom on what, when, how work is to be done
Elements of Organizational Design
• Work Specialization
• Departmentalization
• Authority and responsibility
• Span of control
• Centralized vs decentralized
• Formalization
Model of organization design
Contingency Variable Organizational Design
• Strategy
• Structure should facilitate goals; and goals are important part of
organizations strategy
• Simple strategy – simple structure
• Elaborate strategy – complex structure
• Eg.
• Innovation will thrive in more organic design
• Cost/quality control required mechanistic approach
Contingency Variable Organizational Design
• Size
• Large organizations require mechanistic approach
• Observed that Organizations >2000 employees
• At this level size is less influential and adding more employees has
less impact
Contingency Variable Organizational Design
• Technology
• Convert inputs to output
• Eg
• Automobile manufacture
• Oil processing
Contingency Variable Organizational Design
• Environment
• Environment is a constraint on managerial decision
• Stable environment-
• Mechanistic structure
• Dynamic/uncertain environment- Organic Structure

• Organizations shifting to lean, fast and flexible

Traditional Organizational Design
• How a company starts?
Traditional Organizational Design
• Simple Structure
• Organization design with:
• Low departmentalization
• Wide spans of control
• Centralized
• Little formalization
Traditional Organizational Design
• Simple Structure
• Fast
• Flexible
• Inexpensive to maintain
• Accountability
• Risky
• Dependent on one person
Traditional Organizational Design
• When company starts to grow?
Traditional Organizational Design
• Functional Structure
• Organizational design that groups similar or related occupations
specialist together
• Functional departmentalization to the entire organization
Traditional Organizational Design
• Functional Structure
• Work specialization
• Economies of scale
• Personal and equipment duplication reduction

• Issues: Functional vs organizational goals

Traditional Organizational Design
• Divisional structure
• Organizational structure made up of separate business units or
divisions
• Each division responsible for performance
• Parent company oversees
Traditional Organizational Design
• Divisional structure
• Focuses on results
• Responsibility
• Top management free from day-to-day operations, focus on
strategy and long term

• Duplication of activities and resources

Traditional Organizational Design
Contemporary Organizational Design
• Traditional designs often are not appropriate
• Need for lean, flexible, innovative design
• Mechanical to organic
Contemporary Organizational Design
• Team Structure
• A structure in which the entire organization is made up of work
teams.
• No clear line of managerial authority from top to bottom
• Team design and work in their own best way
• Responsible for their respective area
Contemporary Organizational Design
• Matrix Structure
• A structure in which specialists from diOerent functional
departments are assigned to work on projects led by project
manager
• Dual chain of command
Contemporary Organizational Design
• Project Structure
• A structure in which employees continuously work on projects
• No formal department to return
• To the next project
Contemporary Organizational Design
• Boundaryless Organization
• An organization design that is not defined by, or limited by
horizontal/vertical/external boundaries
• Coined by former GE chairman Jack Welch
Contemporary Organizational Design
• Virtual Organization
• Small core full-time employees
• Outside specialist temporarily hired
• Eg. Movie industry
Contemporary Organizational Design
• Network Organization
• An organization that uses its own employees to do some work
activities and networks of outside suppliers to provide other
needed product components or work process
• Eg. Boeing