ORGANISATIONS

Definition of Organization

Organizations are social arrangements for achieving controlled performance in pursuit of collective goals.

Organizational Dilemma

Organizational dilemma concerns the question of how to reconcile the potential inconsistency between individual needs and aspirations on the one hand, and the collective purpose of the organization on the other.

Nature of Organising

O  Identification and classification of activities

O  Grouping activities O  Assignment of each group O  Provision for coordination in the

organization structure

Elements Of Organisation

o Line & staff o Functional authorityo Hierarchyo Span of controlo Organisational chart

Line

Line employees are workers who are directly responsible for manufacturing goods or providing a service.

Referred to as chain of command. A line structure deals with a company’s core task.

Staff

Staff employees are workers who are in advisory positions and who use specialized expertise to support the production efforts of line employees

Functional Authority

A functional relationship exists where a staff department has the authority to insist that the line manager implement its instructions concerning a particular issue.

Hierarchy

Hierarchy refers to the number of levels of authority to be found in an organization.

Span of Control

Span of control is the number of subordinates who report directly to a single manager/supervisor.

“One of the surest sources of delay and confusion is to allow any superior to be directly responsible for the control of too many subordinates." -Graicunas

A Sample Organization Chart

C h ie fA cco u nta n t

B u dg etA n a lyst

V ice P re sid e n tF in an ce

P la n tS u pe rin ten de nt

M a in te na n ceS u pe rin ten de nt

V ice P re sid e n tM a nu fa c tu ring

T ra in ingS p e c ia list

B e ne fitsA d m in is tra to r

D ire c to rH u m an R e so u rces

C E O

Organisational Chart Organisational chart is a pictorial

record that shows the formal relations that the company intends should prevail with it.

The chart shows the main departments & senior positions within the organisation.

It is the usual way to examine the structure of an organisation.

Structure - Purpose

An organization structure is designed to clarify:

O  who is to do what tasks O  who is responsible for what resultsO  remove obstacles to performance caused

by confusion and uncertainty of assignment O  furnish decision making and communication

networks that reflect and support organization objectives

Organisational Structure

Structure is a means for attaining the objectives and goals of an organization – Peter Drucker (1974)

Organisational Design “In designing the organization, the

leader should focus on optimizing the response time to changes in the external environment.” (Stata, 1989)

“Competitiveness does not lie in downsizing it lies in design” (Dodds,1993)

Organisational Design-Change

“ For managers, the dynamics of knowledge impose one clear imperative: every organization has to build the management of change into its very structure.” (Drucker,1992)

Organisational Design: Structural perspective

People’s attitudes are shaped as much by the org in which they work as by their pre-existing personality variables.

Stresses the logical and rational elements of org and de-emphasises peoples preferences and feelings.

          

Organisational Design: Behavioural perspective Internal (individual) factors are main

determinants of human behaviour in org rather than external (structural) ones.

Behavioural scientists have found that there is an important relationship between a unit’s or individual’s assigned activities and the unit members’ pattern of thought and behaviour.

Organizational Choice Corporations, long have wrested with the problem

of how to structure organizations to enable employees, particularly the specialists, to do their jobs with maximum efficiency & productivity.

The perplexing issue is whether to organize around functions or products.

Types Of Organisations

Functional Organisation Divisional Organisation Matrix Organisation

Functional Organisation

Job specialisation in the horizontal dimension … is an inherent part of every organisation, indeed every human activity. – Mintzberg, 1979

Functional Org Structure

Chief Executive Officer or President

Manager Production

Manager Engineering

Manager Marketing

Manager R&D

Manager Personnel

Manager Accounting

Lower-level managers, specialists, and operating personnel

Functional Organisation(Merits)

Logical reflection of functions Maintains power-prestige of functions Occupational specialization Simplifies training & enables

professional development Tight control

Functional Organisation (Demerits) Over specialisation-narrow viewpoints Reduces coordination between

functions De-emphasis of overall objectives Slow adaptation to environmental

changes Conflicts over which products have

priority

Divisional Organisation

This type of structure occurs when the organisation is arranged around the main products or services.

Specialisation by location divides the organisation geographically usually according to location of customers.

Divisional Org Structure

Chief Executive Officer or President

Corporate Staff

Division A

General Manager

Division B

General Manager

Division C

General Manager

Manager Production

Manager Engineering

Manager Marketing

Manager R&D

Manager Personnel

Manager Accounting

Organized similarly to Division 1

Organized similarly to Division 1

Lower-level managers, specialists, and operating personnel

Divisional Organisation(Merits) Focused on product line & customer needs Growth & diversity of products Improves coordination & response to

changes in demand pattern Responsibility of profits at divisional level Training ground for general managers 

Divisional Organisation (Demerits)

 Requires more persons with general management capabilities

Maintenance of central economical services difficult

 Lesser control by top management May develop a product focus at

expense of wider company interests

Matrix Organisation

Combination of functional and product structures. It attempts to capture the advantages of each of these approaches.

On one axis is a range of products or projects, with a manager responsible for each. On the other are the various functional groups.

Matrix Org Structure

Chief Executive Officer or President

Corporate Staff

Manager Administration

and Human Resources

Manager Projects

Manager Manufacturing

Manager Engineering

Manager Marketing

Manager Public Relations

Project A

Project B

Project C

Project D

Matrix Organisation(Merits)

More than one critical orientation to the company operations

Oriented toward end results Pinpoints responsibility Specialised knowledge is widely

shared but developed within the functional group

Matrix Organisation(Demerits)

Conflict in organizational authority Problem of defining the extent of

Project Manager’s authority. Functional groups may tend to

neglect their normal duties. Results in a complex structure and

difficult to manage

Choice of structure

(1)Which provides the most efficient utilization of machinery and equipment?

(2)Which provides the best hope of obtaining the required control and coordination?

(3) Which approach permits the maximum use of special technical knowledge?

Analysts usually fail to recognize the complex set of trade-offs involved in these decisions.

Informal Organisation

Defined as “a network of personal and social relations not established or required by the formal organization but arising spontaneously as people associate with one another.” Keith Davis.

Within the formal structure an informal organization will always be present.

Decentralisation Decentralisation implies more than

delegation: it reflects a philosophy of organization and management. It requires a careful selection of which decisions to push down into the organization structure and which to hold near the top

It is the tendency to disperse decision-making authority in an organization structure. Tends to create a climate for more rapid growth and development of personnel.

Centralisation Centralisation and decentralisation are

tendencies. Centralisation is the degree to which

authority is retained by higher-level managers in an organization rather than being delegated.

If a limited amount of authority is delegated, the organization is usually characterized as being centralized.