organizational structure

Presenters

1. Muhammad Tayyab (2011-ME-339)2. Ali Fahad (2011-ME-337)3. Khizer Javaid (2011-ME-336)4. Adeel Khan (2011-ME-338)

04/09/2023 06:26 PM 1

Work Specializtion Do what you excel

04/09/2023 06:26 PM Decision Making/ Ali Fahad 2

Organizational design

An organizational design is the outline of a company’s framework and guidelines for managing business operations.

Is engaged when managers develop or change an organization's structure.04/09/2023 06:26 PM 3

Six Elements

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• Work specialization• Authority and responsibility• Centralization versus decentralization• Chain of command• Span of control• Departmentalization

Specialization

• Specialization is the term used to describe when someone gets really good at a particular work task.

• One task can be done very well and quickly.

• Workers end up with very specific skills


Work Specialization

Work specialization is a component of organization structure that involves having each discrete step of a job done by a different individual rather than having one individual do the whole job.

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Key Features

• The entire job is broken down into steps, each step completed by a separate individual.

• Individual workers specialize in doing part of an activity.

• Involves repetitive performance of a few skills.

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Key Features

• Can be viewed as a means to make the most efficient use of employee's skills

• Some task requires highly developed skills

• Others can be performed by the untrained

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HighLow

High

Work Specialization

Pro

duct

ivit

yImpact from economies of specialization

Impact from human diseconomies

Advantages

• Efficiency: A person who spends his or her time performing one relatively simple task becomes very efficient at that particular task.

• Time Saving: No time wasted on in moving from one job to another. Transfer time between tasks is decreased.

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Advantages

• Equipment: The savings on equipment. If workers specialize, they will not need to have a full set of tools or other equipment.

• Training: There is a saving time on training of operatives. An employee could be easily trained for a particular task he or she specializes in, in a short period.


Advantages

• Employee replacement becomes easier.

• Efficiency:Practice make perfect, there fore the work within particular skills will develop skills and efficiency through repetition of the job.Work specialization creates efficiency and productivity

• Job specialization is job security and you could also get higher pay for being specialized in a certain area.


Advantages

• Reduce Cost of Production: In the particular activities the specialized person will be effectively handling it out as a result there be no need giving cost of repeating the same job.


Disadvantages

• Loss of flexibility: If workers specialize too much it may be difficult for them to performing other tasks when there is a need to cover for workers who are not present.

• Monotony: Workers can get bored performing the same tasks everyday. This may result in them making mistakes and may result in absenteeism or even labor turnover.


Disadvantages

• Loss of skills: Some claim that by breaking production into a series of separate, simple and often mechanized tasks, workers are not challenged and are not able to gain sufficient job satisfaction.


Disadvantages

• Increased risk of unemployment: Specialization means that workers may not have a wide range of skills. When demand or supply conditions change their particular skills may no longer be needed. You could also have a hard time finding a new job if your set of skills is specialized in one area.


Alternatives

• To promote career development, alternatives include job rotation, job enlargement and job enrichment activities

• You can enable employees to develop and expand their abilities in a few ways. Broaden the job characteristics, such as the number of tasks a person performs.


Alternatives

• Job Rotation Systematically moving employees from

one job to another. This reduces employee boredom. It also enables you to ensure that you

have trained employees ready to perform all the different types of tasks required to produce a product or service.


Alternative

• Job Enlargement: An increase in the total number of tasks performed.

Increases training costs, unions want workers paid more pay for doing more tasks, and work may still be dull and routine.

This can make employees feel more valuable to the organization and reduce absenteeism due to low morale and boredom with a single task.


Alternative

• Job Enrichment: Increasing both the number of tasks the

worker does and the control the worker has over the job.

It is more comprehensive than job rotation or job enlargement

When workers have a high degree of autonomy, they tend to take more interest in their work.

This motivates them to produce products and services of high quality.


Alternative

• Job characteristics approach • The job characteristics approach is an

alternative to job specialization that suggests that jobs should be diagnosed and improved along five core dimensions, taking into account both the work system and employee preferences. The five dimensions are as follows:


Alternatives

Core Dimensions• Skill variety—the number of tasks a person does

in a job.• Task identity—the extent to which the worker

does a complete or identifiable portion of the total job.

• Task significance—the perceived importance of the task.

• Autonomy—the degree of control the worker has over how the work is performed.

• Feedback— the extent to which the worker knows how well the job is being performed.


Alternatives• Work Team

– An alternative to job specialization that allows the entire group to design the work system it will use to perform an interrelated set of tasks.

Centralized Design

Centralized organizational structures rely on one individual to make decisions and provide direction for the company.

Small businesses

Owner Responsible


Advantages

Efficient regarding Business Decision.

Business owners typically develop the company’s mission and vision.

Employees follow clear cut commands.


Disadvantages

Negative Effect from Bureaucracy.

Sluggish Business Decision.


Decentralized Design

Several Individuals responsible for decision making and running of business.

“Run their department as they see fit.”

Rely on Team Environment.

Individuals have certain level authority.


Advantages

Innovation

Variety of expertise and knowledge for running of business.

Broad-based management team.


Disadvantages

Everyone has different opinion.

Difficult in gathering everyone on same business page.


Authority and Responsibility

Authority: It is the power that has been legitimized by the organization.

Responsibility: It is an obligation to perform the assigned activities.


Delegation

The process by which managers assign a portion of their total workload to others.

Reasons: To enable the manager to get more work done

by utilizing the skills and talents of subordinates.

To foster the development of subordinates by having them participate in decision making and problem solving.

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Line Authority and Staff Authority

• Line authority entitles manager to direct the work of an employer. A manager with the line authority has the right to direct the work f employees and make certain decisions without consulting anyone.

• The staff authority is used to support, assist and advise the holder of line authority. e.g., organization policy enforcement

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Line Versus Staff Authority

Other

ExecutiveDirector

Assistant to theExecutive Director

Director of HumanResources

Director ofOperations

Director ofPurchasing

Otherdirectors

Unit 1Manager

Unit 2Manager

Humanresources

Operations Purchasing Other Humanresources

Operations Purchasing

Line authority

Staff authority

Departmentalization

Departmentalization is the grouping of jobs according to some logical arrangement. As the organization grows in size and complexity, it is no longer possible for one manager to oversee all of the workers, so workers are assigned to new managers based on some overall plan.


Types of Departmentalization

• Functional Departmentalization:• Product Departmentalization:• Customer Departmentalization:• Process Departmentalization:• Location Departmentalization:


Functional Departmentalization

The grouping of jobs involving the same or similar activities.Example: manufacturing, marketing, sales and accounting.


•


Functional Departmentalization

• Advantages– Each department can be

staffed by functional-area experts.

– Supervision is facilitated in that managers only need be familiar with a narrow set of skills.

– Coordination inside each department is easier.

• Disadvantages– Decision making becomes

slow and bureaucratic.– Employees narrow their

focus to the department and lose sight of organizational goals/ issues.

– Accountability and performance are difficult to monitor.

Product Departmentalization

• It involves grouping and arranging activities around products or product groups.Examples:Advantages:Disadvantages:


April 18, 2006 LIS580- Spring 2006 40

Divisional Organizationfor a Pharmaceuticals Company

FIGURE 6–2G.Dessler, 2003

Product Departmentalization

• Advantages– All activities associated with

one product can be integrated and coordinated.

– Speed and effectiveness of decision making are enhanced.

– Performance of individual products or product groups can be assessed.

• Disadvantages– Managers may focus on

their product to the exclusion of the rest of the organization.

– Administrative costs may increase due to each department having its own functional-area experts.

The grouping of activities around products or product groups

Location Departmentalization

• It groups jobs on the basis of geographic sites or areas.Examples:Advantages:Disadvantages:


Location Departmentalization

• Advantage– Enables the organization to respond

easily to unique customer and environmental characteristics.

• Disadvantage– Large administrative staff may be

needed to keep track of units in scattered locations.

The grouping of jobs on the basis of defined geographic sites or areas.

Customer Departmentalization

• It structures the organization’s activities to respond to and interact with specific customers and customer groups.

• Examples:Advantages:Disadvantages:


April 18, 2006 LIS580- Spring 2006 45

FIGURE 6–3

Customer Departmentalization,Grayson Steel Company

G.Dessler, 2003

Chain Of Command

• A clear and distinct line of authority among the positions in an organization.Components of chain of command:There are two components:

• Unity of command.• The scalar principle.


•


Unity of Command

• Unity of command suggests that each person within an organization should have a clear reporting relationship to one and only one boss.


The Scalar Principle

• The scalar principle suggests that there should be a clear and unbroken line of authority that extends from the lowest to the highest position in the organization.


Span of control

• The span of control determines how many people will report to each manager.

• It is the number of subordinates that a manager can direct efficiently and effectively.


April 18, 2006 51

Spans of Control in Country-Based Organization

Span of Control

• Wide span: Larger number of direct reports.• Narrow span: Fewer number of direct reports.


Tall Vs Flat organization

• Tall organization: More management layers and more hierarchical controls.

• Flat organization: Fewer management layer and decision making closer to the customer.

.


Establishing Reporting Relationships: Tall Versus Flat Organizations

• Tall Organizations– Are more expensive

because of the number of managers involved.

– Foster more communication problems because of the number of people through whom information must pass.

• Flat Organizations– Lead to higher levels of

employee morale and productivity.

– Create more administrative responsibility for the relatively few managers.

– Create more supervisory responsibility for managers due to wider spans of control.

ThankYou


organizational structure

Business

specialization specialization

new job

job security

entire job

job characteristics

alternatives job rotation

particular skills

ali fahad2