Master Of Business EconomicsDepartment of Business Economics

University Of Delhi

ORGANIZATIONAL STRUCTURE

Submitted to- Submitted by-

Mr. Lallan Prasad Saurabh Batra 559

Tuhina Dubey 572

Introduction: An organizational structure is a description of the types of coordination used to organize the actions of individuals and departments that contribute to achieving a common aim. Many organizations have hierarchical structures, but not all.Organizations are a variant of clustered entities. An organization can be structured in many different ways, depending on their objectives. The structure of an organization will determine the modes in which it operates and performs.Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, workgroup and individual. Individuals in an organizational structure are normally hired under time-limited work contracts or work orders, or under permanent employment contracts or program orders.Purpose: The purpose of this research is to investigate how the employees of a successful company perceive their own organizational structure. The company we have chosen to perform a case study at is KBR and WHIRLPOOL.

Method: This is a qualitative study, and in order to investigate the hieracy of the employees we have performed interviews with employees of different levels and departments at KBR and WHIRLPOOL . As a complement to the data collected during the interviews we have made observations outside and inside the facility in order to broaden the knowledge of hieracy.

Acknowledgement

During our process of writing this we have in different levels depended on other people than ourselves.We would like to express our great gratitude to Mr. Lallan Prasad, our professor, has helped us a lot with providing valuable and useful lectures and pushing us to do our best, and for this he deserves a big thank-you.

Mr. Lallan Prasad Saurabh Batra

Tuhina Dubey

Index

1. Introduction ………………………………………………………………………………………………………………..7

1.1 Background ….……………………………………………………………………………………………………..7

1.2 Discussion of the problem……………………………………………………………………………………8

1.3 Research question and purpose.…….…………………………………………………………………….9

1.4 Our project – a metaphor………………….…………………………………………………………………10

2. Method . ……………….…………………………………………………………………………………………………….11

2.1 The role of the researcher .…………………………………………………………………………….…..12

2.2 Type of the project ………………………………………………………………………………………….….12

2.3 Case study . ………………………………………………………………………………………………………...12

2.4 Interviews and selection .…………………………………………………………………………………….13

2.5 Observations ………………………………………………………………………………………………………..14

2.6 Analysis …….………………………………………………………………………………………………………….14

2.7 Reliability of the project ..………………………………………………………………………………..……15

3. Theory ………………………………………………………………………………………………………………………..…16

3.1 Culture …..……..……………..………………………………………………………………………………………...16

3.1.1Subculture.……………….………………………………………………………………………………………….16

3.1.2Culture and successful companies .……………………….…………………………………………….17

3.2 Cultural expressions ..………………………………………………………………………………………………..18

3.2.1The onion diagram ………………………………………………..…………………………………………….18

Symbols. ……………………….……………………………………………………………………………………..18

Heroes. ………………………………………..………………………………………………………………………19

Rituals. ……………………………………………..…….…………………………………………………………..19

Values and motivation .……………………….…………………………………………………………..….19

Practices. ……………………………………………………………..………………………………………….…..21

4. Empirical Data . …………………………………………………………………………………………………………….22

4.1 Observations . ………………………………………………………………………………………………………….22

4.1.1Social factor………………………………………………………………………………………………………..22

4.2 The Manager’s perspective .…………………………………………………………………………………….23

4.2.1A technical product and the German “perfectionism”. ……………………………………… 23

4.2.2BMW– snobbish and expensive? …………………………………………………………………………24

4.2.3 A cheerful atmosphere among friends ……………………………………………………………… 24

4.3 The salesmen’s perspective ……………………………………………………………………………………..26

4.3.1An unique working environment ………………………………………………………………………..26

4.3.2A joyful driving experience ..……………………………………………………………………………….27

4.3.3Itis not al about selling cars. .………………………………………………………………………………27

4.4 The service-advisor’s perspective . .………………………………………………………………………….28

4.4.1Theimportance of good customer relations . .…………………………………………………… 28

4.4.2 German governance on a formal and unconsciously level ..……………………………… 28

5. Analysis . ……………………………………………………………………………….……………………………………..30

5. 1 Culture . …………………………………………………………………………………………………………….……30

5.1.1Subcultures. ……………………………………………………………………………….…………………..…30

5.1.2Culture and successful companies . ……………………………………………………………………32

5.2 Cultural expressions . …………………………………..……………………………………………………….…33

5.2.1TheOnion diagram . ……………………………………………………………………………………..……33

Symbols. ………………………………………………………………………………………………………….…33

Heroes. …………………………………………………………………………………………………………..…..34

Rituals. ……………………………………………………………………………………………………………..…34

Values and motivation . …………………..……………………………………………………………….…35

Practices. ………………………………………………………………………………………………………….…37

6. Conclusions . ……………………………………………..………………………………………………………………...38

6.1 Employees’ perceptions of their own organizational culture. …………………………………….38

6.2 Employees’ perceptions of the organizational culture in the parent company …………..39

6.3 Connections . …………………………………………………………………………………………………………..…39

6.4 What do we make out of this? ……………………………………………………………………………………39

6.5 Further recommendations ….………………………………………………………………………………………40

References………………………..…………………………………………………………………………………………………41

Survey Analysis………………….…………………………………………………………..……………………………………43

Appendix1 – Interview guidelines…….…………………………………………………………………………………43

ORGANIZATION STRUCTURE

STRUCTURE

Structure : An entity (such as an organization) made up of elements or parts (such as people, resources, aspirations, market trends, levels of competence, reward systems, departmental mandates, and so on) that impact each other by the relationship they form.

A structural relationship is one in which the various parts act upon each other, and consequently generate particular type of behavior.

Organization Structure

An organization structure depicts the authority relationships between the various positions in the organization by showing who reports to whom.

Structure is shown on an organization chart or job – task pyramid.

Directly related to organization objectives. Should be able to accommodate changes in the business

environment.

Why have a Structure?

Clear-cut Authority Relationships allocates authority and responsibility and specifies who reports to whom.

Pattern of Communication provides pattern of coordination.

Location of Decision Centers determines the location of decision making in the organization

Proper Balancing-More Critical activities placed higher in organization- Activities of comparable importance given at equal

levels in structure Stimulating Creativity: Well defined authority pattern

leads to creative thinking and initiative amongst organizational members.

Encouraging Growth: Flexible structure helps meet challenges and creates opportunities for growth

In short, existence of a good organization structure is important for sound management.

Mechanistic Model

Management system based on a formal framework of authority that is carefully outlined and precisely followed.

- Known as the “Military System”- Is appropriate when the external environment is

fairly stable- Drawback is Lack of flexibility

Organic ModelManagement system founded on cooperation and knowledge-based authority.

- Less formal and more flexible.- Tends to work better in dynamic environments.- Requires more cooperation among employees than

does a bureaucracy.

Why Do Structures Differ? – Size

Size – refers to number of employees in the organization

Why Do Structures Differ? – Technology

An organization transfers its inputs into outputs.

Larger organization --- Mechanistic structureSmaller organization --- Simple structure

Small-batch and continuous processes work well in organic structures.

Mass production operations work best in

Why Do Structures Differ? – Environment

Institutions or forces outside the organization that potentially affect the organization’s performance.

Why Do Structures Differ? – Strategy

Structure follows strategy

Small-batch and continuous processes work well in organic structures.

Mass production operations work best in

Organizations that operate in stable external environments -mechanistic structure.Organizations that operate in volatile and frequently changing environments - organic structure.

Key Terms Division of Labor: involves two steps: dividing work into

separate tasks and assigning these tasks to workers. Span of Control :relates to the number of employees that a

manager directly supervises. Centralization versus Decentralization.

Centralization is the degree to which formal authority is centralized within a unit or level of an organization.

Decentralization is the process of actively shifting authority lower in a firm’s hierarchical structure. This effectively gives more decision-making power and responsibility to those in supervisory roles.

Types of Organization Structure

Line Structure

Oldest and most common type of organisation. Line of authority flows vertically form the top most executive

to the lowest subordinate throughout the entire organisational structure.Authority is greatest at the top and reduces through

each successive level down the organisational structure.

Line and Staff Structure

Same as line organisation, with Staff, officers or functional experts to advise the line officers

Line officers are the executives, and the staff officers are their advisers.

Applicable in a large-size business concern, with its multifarious functions of complicated nature needs.

The Line officers make the decisions and issue instructions to subordinates,

The staff officers have no authority to issue instructions.

Departmental StructureBased on the process of Departmentalization.

Grouping similar types of jobs together so that they can be

accomplished more efficiently and effectively. Five traditional methods for grouping work activities:

Departmentalization by function

Departmentalization by product

Departmentalization by process

Departmentalization by geographical regions

Departmentalization by customer

Departmentalization by functiono Grouping activities by functions performed.o Placing employees with shared skills and knowledge into

departments like HR, IT, accounting, manufacturing, logistics, marketing, and engineering.

o Advantage : Specialisation – each department focuses on its own

work Accountability – someone is responsible for the

section Clarity – know your and others’ roles

o Disadvantages Closed communication could lead to lack of focus Departments can become resistant to change Coordination may take too long

Departmentalization by product o Grouping activities by product line.

o Placing all activities related to the product or the service under one manager.

o For instance, major department stores are structured around product groups such as home accessories, appliances, women's clothing, men's clothing, and children's clothing.

Departmentalization by process

Groups jobs on the basis of product or customer flow. Each process requires particular skills and offers a basis for

homogeneous categorizing of work activities.Departmentalization by geographical regions

Groups jobs on the basis of territory or geography. If an organization's customers are geographically dispersed, it

can group jobs based on geography.

Departmentalization by customer

Grouping activities on the basis of common customers or types of customers.

The assumption is that customers in each department have a common set of problems and needs that can best be met by specialists.

Matrix structure Groups employees by both function and product. 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

Individuals responsible to two managers

-The project manager

-The functional area manager

Advantages Individuals can be chosen according to the needs of the

project. The use of a project team which is dynamic and able to

view problems in a different way as specialists have been brought together in a new environment.

Project managers are directly responsible for completing the project within a specific deadline and budget.

Disadvantages

A conflict of loyalty between line managers and project managers over the allocation of resources.

Projects can be difficult to monitor if teams have a lot of independence.

Costs can be increased if more managers (ie project managers) are created through the use of project teams.

 Organizational circle: moving back to flat

Few or no levels of intervening management between staff and managers.

Possible only in smaller organizations or individual units within larger organizations

Productivity increases as well-trained workers are involved in the decision making process.

Facilitates more personal relationship between workers and managers.

 Virtual Organization

A small , core organization that outsources major business functions.

Managers typically spend their time coordinating and controlling external relations, by way of computer networks

Special form of boundary less organization Works in a network of external alliances, using the Internet. Highly centralized with no departmentalization

Advantages:

Right person is assigned right job. minimizes bureaucratic overhead lessens long term risks flexibility of operations Promotes innovative ideas

Disadvantage

Reduces management control over key parts of the business.

Boundary less Organization

It is an organization that is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure.

Seeks to eliminate chain of command , have limitless span of control, and replace departments and empower teams

Relies heavily on Technology and hence called T- form Organization

Making Boundaries More PermeableRemoving Vertical Barriers :

Flatten Hierarchy Cross Hierarchical teams Participative decision making 360 degree performance appraisal

Removing Horizontal Barrier : Crossfunctional teams Activities around process Lateral Transfers

Boundary less OrganizationAdvantages

Leverages the talents of all employees Enhances cooperation, coordination, and information-sharing

among functions, divisions, SBUs, and external constituencies Enables a quicker response to market changes through a single-

goal focusDisadvantages

Lacks strong leadership and common vision which can lead to coordination problems.

Time-consuming and difficult-to-manage democratic processes Lacks high levels of trust which can impede performance

Organizational Designs and Employee Behavior

Case Study-KBR

• Work specialization contributes to higher employee productivity, but it reduces job satisfaction.

• The benefits of specialization have decreased rapidly as employees seek more intrinsically rewarding jobs.

• The effect of span of control on employee performance is contingent upon individual differences and abilities, task structures, and other organizational factors.

• Participative decision making in decentralized organizations is positively related to job satisfaction.

The KBR story

1901-M.W. Kellogg engineering firm established

Specialization-engineering expertise, petroleum refining and petrochemical processing facilities.

1919-Brown and Root construction firm established

Specialization-major road construction company and general contractor

2007-KBR became a stand-alone firm after a series of acquisitions and divestments

KBR Business units

Upstream Downstream KBR Services KBR Technology KBR Ventures Government and Infrastructure (G&I)

Project Allenby/Connaught

Objective-To provide modern, high quality, fully serviced, purpose-built living and working accommodation to nearly 19,000 soldiers

Aspire Defence

Aspire Defence Limited (ADL) oversees and manages the contract, reporting directly to the Ministry of Defence

Aspire Defence Capital Works (ADCW) delivers the construction Aspire Defence Services Limited (ADSL) delivers the facilities and

services management for the project.

ORGANISATIONAL STRUCTURE

A hierarchy is an organisation is the structure in layers where each person has clear roles and responsibilities.

ADSL has a flat hierarchy.o Effective communicationo Fewer levels of authorityo Less intermediaries and direct contact with senior

management ADSL is gradually moving from a functional structure

towards a matrix style of working.

FUNCTIONAL STRUCTURE MATRIX STRUCTURE• Specialization • Efficiency • Effective control

TYPICAL MATRIX STRUCTURE

• Different skill sets• More than one line of

communication• Team approach

Demerits of Functional Structure

Lack of Co- ordination and synchronization Difficulty in fixing responsibility Decision making bureaucratic Lack of broader outlook Flow of communication complicated

Merits of Matrix Structure

Because key people can be shared, the project cost is minimized

Faster communication and sharing of resourses as attainment of same goal

There is a better balance between time, cost and performance,hence more efficient

Authority and responsibility are shared Stress is distributed among the team Responds well to changes in external environment.

Strengths

Opportunities Threats

Weaknesses

Collaboration with UK based Company can lead to domination.

Projects of Army in Foreign country complexities and allegations.

• Matrix Structure• Work Culture and Business Ethics• Clearly Defined Job Roles• Proximity to the work-site.• Recognition of talent • Good training facilities

• Project not related to core competency• Flat structure with a matrix

styleconflicts• Flat Structure – Threat to Confidentiality

of Army• Two chains of command in matrix

Structure

• Recruitment Process – Can create new Business Potential

• JV with UK Based Company – New businesses in Europe

• New teams with Matrix Structure will lead to future progress.

SWOT Analysis

SALIENT FEATURES

A horizontal structure gives more responsibility and autonomy to each of its employees .

Fosters mutual respect from the employees Attracts and develops talent Gives opportunities for growth and decision making at

individual level A dynamic work environment. Motivates them to perform better A flat hierarchy with a matrix structure, which attracts versatile

managers, who are looking for challenges. Span of control across business functions widens as one goes

higher. Senior management team with extensive and diversified

personal and professional experience Vision and mission of top management to continually improve

the business and create an adaptive culture

CONCLUSION

¨KBR and ADSL have evolved over the years

¨Brought about positive changes in organizational structure

¨Deliver the most efficient, high quality service to meet their client needs

¨Fosters talent by a world class recruitment and training process and good HR practices

¨ADSL has created a niche for itself in the market owing to it being a learning organization

Organizational StudyWHIRLPOOL

Organizational Structure & Reporting System

Reporting System

Functional report to the MD. Regional managers report directly to their functional

heads. They also give a dotted line report to the various SBU

GMs. Regional manager has a dedicated team of Sales who

report to them.

SBU Distribution At Whirlpool

Three SBUs: Water Purifiers, Refrigerators, A/C Washing Machines & Microwave Ovens

Kurt Lewin’s Three Step Change Model at Whirlpool:

Unfreezing - This was the phase where status quo was questioned and the need to change the structure and to bring it in sync with the external environment was emphasised. The initiator to this was the fall in the top line of the company.

Moving - The will to change had already been established in the organisation, all that was needed was a proper direction. This was the phase when practically feasible ideas were warranted from the employees and a year long project was given to 25 employees.

Refreezing - New performance appraisal systems were put into place, and there was a drastic change in terms of structure and process of the organisation.

Organizational Environment and Diversity

Over 80000 employees all over the world Innovation and Customer Centric High quality consciousness Highly skilled workers Runs Six Sigma programs in Operations, Marketing and Sales Has introduced customer focused Six Sigma Program which has

helped the company in gaining customer loyalty Development of new Technologies and Innovation is their

mantra for success for the future. Global Experience has helped the organization grow over the

years Respect, Integrity, Team Work & Diversity are the core

competencies of the Whirlpool Work Environment Span of control of manager lies between 10-12.

Recruitments And Promotions

Hiring done in accordance with the approved Manpower Plan. External recruitment happens when there is no suitable internal

candidate. Promotions are done by respective Functional heads with inputs

from other division Process initiated with the prior approval of the Unit HR Head:

1. preliminary interviewing.2. screening of applicants.3. correspondence with applicants.4. finalization of terms and condition. 5. arrangements for physical examination.6. employment processing.

Recruitment outside the approved manpower plan requires prior sanction from the Functional heads.

Employee Skills And Learning

Belief in overall development: ‘learn while you earn’ Whirlpool offers an array of distinctive opportunities for

development and growth ‘Leading the Whirlpool Enterprise (LWE)’: 5 level training

module centered towards customer focused culture development Mentorship: development of leadership skills Whirlpool Technical Excellence Program (WETP): hands-on

experience on live company projects Supply Management Rotational Track (SMART): employees

learn about the procurement process, procedures, across the board activities and quarterly learning sessions

Other programs like Global Supply Chain Leadership Development Program (GSCLDP): leadership in logistics, procurement and operations

Emphasis on diversification: In 2007, interns hired from diverse backgrounds such as business, computer science, economics etc.

Employee Skills And Learning

Functional Training Six Sigma Certification Engaging Managers Program

Benefits And Incentives

Incentives allocated by different heads: approved by the concerned VP, disbursed by HR department

Bonus Leisure trips Monetary incentives on a quarterly basis: ensures retention

and dedication Morale Boosting Techniques: inter & intra department events,

like quizzes, sports events, offsite trips Recognition

Monthly Award: CheersAnnual Award: Pinnacle

Disbursement Of Compensation Performance Excellence Plan (PEP)

Performance Level

Definition PEP Leverage Merit Increase

Level 5 Unacceptable Results

0 No Increase

Level 4 Results Need to be Improved

50% to 75% No Increase

Level 3 Strong Results 100% Upto Market Levels

Level 2 Very Strong Results

150% Upto 150% market

Level 1 Extraordinary Results

200% Upto 200% market levels

Conclusion

Non hierarchal, Self empowered and customer centric work environment

Employee involvement in management decisions and approachability to the senior management leads to free flow of innovative ideas

Opportunities of cross functional and international exposure are given to the employee enhances employee skill set for future growth

Goal and responsibility clarity due to extensive communication between the manager and the subordinate

Management gives importance to promote from within the organisation, gives employees fair opportunity for growth.

Performance driven growth and benefits and incentives keep them motivated towards work.

For better communication and flow of information as meeting is conducted with the manager once in a week and with the regional head once in a month

Online portal available for handling valuable suggestions, information sharing and grievances (anonymously).