Posted at 11.29.2018
An organisation structure is a couple of planned relationships between groups of related functions and between physical factors and employees required for the performance of the functions. The organisation structure is normally shown on the organisation chart. It shows expert and responsibility between various positions in the corporations by displaying who studies to whom. Organisation framework lays down the routine of communication and coordination in the enterprises.
Though organisation composition is vital, it isn't an end in itself. According to Peter F. Drucker, "Organisation is no end itself, but a way to end of business shows and business results. Organisaion framework is an essential means; and the incorrect structure will seriously impair business performance and could even demolish it. Organisation structure must be designed so as to make possible the attainment of the aims of the business enterprise for five, ten, fifteen years hence. "
Organisation is a process by which management coordinates the activities of the group of folks for the success of certain predetermined goals. Through organising, the tasks of various members of the group are motivated and designated and responsibilities set so the necessary work is conducted with speed, reliability and economy. The process of organising consists of the next steps:
Determination of Purpose:- This is the first step in organising because organising without any purpose or target has no meaning. The purose of the organisation must be discovered. This will help in responding to the questions like why the suggested organisation is usually to be set and exactly what will be the type of work to be completed.
Division of Activities:- In case the member of the group are to pool their efforts effectively, there has to be a rational section of total activities of the company. This will enable them to really know what is expected of these as members of the group and additionally, it'll avoid dupliacation of efforts.
Creating and Grouping of jobs:- After having divided work into small jobs, these careers are grouped into work organizations, divisions or departments. While grouping of careers, their relationship and homogenity are considered. For example, careers related to particular product, process, customers and territory may be put in a specific group consequently.
Assignment of Sets of Job. For accomplishing different sets of jobs and activities, various departments or divisions are manufactured and these teams are assigned to them appropriately. Along the way of project, proper relationship of every job is established with the other jobs in the division.
Creation of Managerial Hierarchy. After having allocated the jobs, authority is distributed one of the emplyoees working in different departments. In this way authority structure is established giving definite position to each staff. In this particular hierarchy, the staff delegating part of his specialist becomes superior and also to whom power is delegated is identified as subordinate.
Establishing Integration Device. Proper plans must be made to determine coordination systems. Integration or coordination can be achieved through proper specialist relationships-horizontally, and laterally-and through properly organised information and commmunication system. Sound integration system guarantees unity of objectives, team work, team nature, and high morale, and avoids insufficient initiative, misunderstandings, chaos, and inactivity.
Sound organisation framework can contribure greatly to the success c ontinuity and steadiness of the business. The necessity and improtance of organising and organisational framework can be known more precisely based on the following factors :
Facilitates administration. Sensible organisation helps in the performance of management functions like palnning, staffing, derecting and handling. Inadequate company may lead to duplication of work and efforts and some of the important operations may be overlooked. Sound organisation helps the performance of varied managerial functoins by section of labour, steady delegation or job definition and quality of power and responsibility romantic relationship.
Promoters Development and Diversification. Acoustics company designed on technological priinciples can create conditions conductive to organized expansion and diversification of the actions of the enterprise. It can help in keeping the many activities under control and boost the capacity of the enterprice to undertake more activities.
Co-ordination. Organisation is an impartant means of taking co-ordination among the various departments of the venture. It generates clear- cut relationship between your departments and helps inlayi8ng down well balanced focus on various activities. In addition, it offers the channels of communication for the coordination of the actions of different departments.
Optimum Usage of Technological Innovations. A reasonable organisational composition is flexible to provide adequate range for the improvement intechnology. It facilitates producing changes in the organization by modifing the specialist and responsibility relationship in the wake of new improvements.
Optimum Use of Human Resources. Audio organisation suits the jobs with the individuals and vice-versa. It means that every individual is placed on the job for which he's best suited. This can help in the better use of people employed in the enterprise.
Stimulates Creative Thinking. An organisational framework based on clear-cut demarcation of power, higher selection of responsibility, discretionary freedom granted to personnel, bonuses offered for specialised work, etc. will certainly foster the nature of constructive and creative thinking. Such an atmosphere will give a chance for the staff to display their invisible creative talents which, subsequently, will lift the enterprise to accomplish higher goals of business.
Training and Development. An effective organisation facilitates delegation of specialist which is an impartant device for training and producing the employees. Delegation of authority is also an impartant means of directing the subordinates. It prepares these to take more responsibilites whenever need comes up.
Organisation structure provides a basis or platform within which managers and non-managerial employees perform the careers given to them. In order words, organisation framework may be considered as the main factor around which various functions are performed and many functions operate. The composition of organisation is consciously designed by the management. However, in building the structure, the next factors should be considered:
Objectives and Strategy. Design of structure begins with the idenitification of organisational aims. There is no way of devising what the main structure of your organisation should be, lacking any understanting of what the organisation is ideal for and what it is trying to achieve. Since an organisation is a goal-oriented system, it is quite genuine that its goals have decisive role in building its composition. The goals determine its responsibilities and strategies. Alfred Chandler's studies display that structure practices strategy. It management makes a substantial change in its strategy, the structure will need to be modified to accommodate and support such change.
Enviroment. Company is a system and every system has its boundaries. Beyond the restrictions, there exists exterior environment which affects not only the development and working of the company but also its composition. To cope with changing environment, among other activities, organisational process, goals and framework are transformed and made in lines with changes. Environment includes those economic, social, ethnic, political, legal and technological factors which derectly or iindirectly influence the functioning of the company. Therefore, the composition of the company is usually to be designed in view of changes more likely to take place in environment. Put into it, organisation being a sub-system of environment interacts with the environment on regular bassis so you can get inputs and providing output.
Technology. An company is a socio-technical system. Technological aspect which refers to the manner in which various avtivities will be performed, can be an important part of organisational structure. As the activities are related to targets, also, they are related to technoloty. Because every activity to be performed requires some kind of technology, the kind of technology being used in the organisation for carrying out defferent activities would also have an effect on the framework of the company immediately and indirectly.
People. Organisations are formed by and run through people. Lot of people are used for both managerial and non-managerial careers and various activities are given to them and finally they are put in authority associations. These people hold some goals, principles, perceptions, beliefs and attitudes that have direct representation on the framework of company. Therefore, these factors must be studied care of at the time of developing the organisational structure. Indeed, the responsibilities, activities, goals and technology will gain more meaning if they are built round the people.
Size. There are several criteria to find out size of an company such as variety of persons utilized, amount of capital spent, volume of turnover, and physical capacity. However, 'size' has generally been used to refer to the number of employees or associates of an company. Thus organisations could be small or large depending after the number of their workers. As an organisation grows in size, its structure normally becomes more complex or complicated. Jobs that may once be managed by an individual are divided and break up again; new layers of guidance are inserted between your top executive and the get ranking and record. An company is compelled, it its size rises, to realign obligations and tasks and more often than not, to include new integrating units.
In a functional composition, activities are grouped and departments are manufactured on the basis of given functions to be performed. Activities related to a function are grouped in a single product with a view to provide a well defined direction to the whole group. For instance, in an industrial organization, the major functions like development, financing, marketing and personnel may be grouped into different departments. Functional departmentation is the most widely used basis for organising activities. It really is found in nearly every enterprise at some level in the organisation structure as it causes better planning and control of the main element functions which the success and progress of the venture depends. It helps specialised performance of varied functions.
Advantages:- The advantages of functional framework are as under:
It is much easier to organise departments bases on functions and sub-functions.
It allows presenting balanced weightage to the basic functions which the success of a company depends.
It introduces specialisation resulting in higher efficiency and economical functions.
It ensures effective utilisation of staff in several departments.
It helps in training of specialist managers rather than generalist professionals.
It facilitates better coordination of activities within each team.
It allows delegation of specialist by the chief executive to the many functional minds.
Disadvantages:- The demerits of useful structure are as under:
Each department concentrates on a narrow selection of activities relating to its function only.
It may be difficult to accomplish coordination between different departments for their different orientations.
There may be insufficient understanding between different departments. The atmosphere of mistrust may lead to inter-departmental issues.
Decisions are postponed where decision-making consists of two or more departments.
Excessive specialisation may kill teamwork in the company.
Functional organisation may confirm unsatisfactory in handling diversified products and specialized jobs.
Functonal specialisation restricts development of generalists or professionals with all-round functions.
Divisional framework is shaped by creation a couple of autonomous models or division which can be coordinated by the central headquarters. For examples, a firm may have three divisions to manage textiles, cement and delivery. But to organize their functioning, certain essential services such as commercial planning, Funding, legal and research & development are organised at the head office as shown in fig. 29. 2. This structure is favored by giant firms dealing in multiple products and operating in different geographical regions. The merchandise are often unrelated and require different emphasis on different function. Along with the territories dished up by the organization have their particular problems.
In a divisional structure, each division is semi-autonomous and has its own resources and facilities. Thus, you can find duplication or triplication of activities, workers and equipment. For example, two divisions may have their separate marketing research wings or public relations departments. Why don't we assume a typical company has two divisions for metallic products and concrete respectively. Each section may have further firm based on practical departmentation.
In India, several companies like DCM, Gwalior Rayons, Hundred years Mills and Voltas Follow divisional framework to organize their procedures. The divisional composition may be predicated on product or geographical territory.
Product based composition is followed by huge organizations having multiple products. Under this, each major product or product line is organised as another division. It really is employed where the unque characteristics of the product are of great significance and they require professional machines and equipment and trained staff. It is appropriate when each product is relatively intricate and a great deal of capital is necessary for every single product. For example. Cement and shipment.
ADVANTAGES:- The advantages of product based framework are as follows:-
Product departmentation can reduce the coordination problems which are manufactured under functional departmentation. You can find integration of activities relating to a particular line of product. It facilitates product growth and diversification.
It focuses individual attention on each products.
It causes specialization of physical facilities on the basis of products which results in overall economy.
It is simpler to examine and compare the performance of various product divisions.
It keeps problems of development isolated from those of others.
Since each product administrator is required to supervise the diverse functions of creation, sale and fund with respect to a particular products, there is a wide range for the training and development of allround executives.
DISADVANTAGES:- The Cons of product based mostly structure are as under:-
It leads to the duplication of employees and physical facilities. Each product department maintains its independent facilities and employees. It could become of each office. High cost of procedures and large investment make it unsuitable for small businesses.
It may be problematic for an organization to change itself to changes in technology, demand, etc. though product lines can be added and decreased easily without dislocation the prevailing operations.
Product departmentation may sometimes lead to issues in coordination of certain specific pursuits like marketing, funding and accounting.
Geographical structure is followed in case there is service organizations that have offices in different regions or physical areas. Each local office has self-employed functional departments to understand its objectives. For example. Life insurance Organization of india (LIC) has semi-autonomous divisions indifferent parts of the country.
Advantages:- Territorial departmentation gets the following advantages:
It brings about the advantages of local operations. The neighborhood managers tend to be conversant with the needs and those of their customers. They are able to adapt and respond to the neighborhood situations with rate and accuracy and reliability.
The company can meet up with the demands of various regions better.
Better attention can be paid to local customer groupings thereby boosting the image and goodwill of the business. It ensures quick delivery of products to customers in several areas, and extensive exploitation of local marketplaces. l
A regional department can achieve better coordination and guidance of activities in a particular area, It also help in reducing transportation and syndication costs.
Disadvantages:- Territorial dedpartmentation may suffer from the following difficulties:-
There is multiplication of physical facilities. It contributes to uneconomical procedures.
There may be problems of integration between various regional offices. They may compete with one another using areas.
There may be insufficient talented personnel to take charge of local departments.
There will also be problems in providing centralized services to various departments which are located in different locations.
Departmentation by customer may be adopted in enterprises employed in providing specialised services to different classes of customers. Under this, customers will be the guide for grouping the activities. The management categories the activities upon this basis to cater to the requirements of clearly defined customer groups. For example, a big auto servicing business may organize its departments the following: heavy vehicle servicing division, car servicing section, and scooter servicing section.
Advantages:- The benefits associated with structure based on customers are the following:
Customer departmentation can give attention to the special needs of different sorts of customers.
It employ's personnel with special abilities for get together different customer requirements.
It causes higher satisfaction of customers which boosts the reputation of the venture among the public.
Disadvantages:- Customer founded structure is also not free from drawbacks. For instance, it creates the issue of co-ordination between the departments organised upon this basis and those organised on other bases. Greater emphasis to the need of the customers can lead to less than ideal use of space, equipment and specialised personnel.
The term 'job' may thought as a complex group of activities that happen to be diverse, specialised and technical to be performed within the given time frame and cost framework. The project composition is designed to handle such group of activities alongwith the larady existing organizational structure.
Advantages:- The merits of project composition are as under:
Project organization specializes in conclusion of a sophisticated project or project. It could be tailored to meet up with the requirements of this project.
Project company provides greater versatility in organization; increased check above the task work, provision of determining exact responsibility and better co-ordination of organizational resources.
Project firm requires specialists invarious domains. Specialists get higher satisfaction while focusing on complex projects.
It helps the timely conclusion of a task without disturbing the normal activities of the organization.
Limitation:- The limits of project business are as under:
Uncertainty in project structure develops because the project Manager must offer with specialists from a number of diverse domains. The specialists often have different types of solutions and perspectives.
Lack of approved organizational processes, lack of clearly defined responsibility, insufficient communication lines and measurement yardsticks make the job of a task manager often more challenging.
The project director has to face a very unusual decision pressure that results from the severe fines to be impsed as a result of delay in conclusion of the project.
Motivation of specialists may pose another problem for the project manager. Moreover, there could be conflicts among the specialists frequently for their different orientations.
Matrix organization, also called grid company, is a hybrid structure combining two complementary structures namely, efficient deparmentation with natural project composition. Matrix business is a two dimensional composition, a combo of pure task structure and the traditional functional departments. Users of particular task team are drawn from the efficient departments and are located under the way of the project manager. The project administrator has overall responsibility for the success of the particular project.
Advantages :- The merits of matrix organization are as under:
The matrix structure is an efficient means for combining the diverse specialised skills required to a complete a complex assignment or execute a task.
It is versatile in nature. It can be applied more usefully to an organization involved in job which range from small to large.
It motivates workers involved in the job. They are able to utilize their competence and make maximum contribution for the execution of the task.
It assists with improving move of communication around the organization as required information is communicated both vertically as well as horizontally.
Disadvantages:- The disadvantages of matrix structure are the following:
The matrix organization violates the classical concept of unity command line. The employees from functional department have to handle the situation of two bosses, task manager and useful manager.
In matrix company, the problem of coordination is more complicated because neither practical head comes with an authority over project unit in a primary manner nor the task administrator has full specialist over project activities.
Matrix company is not really a homogeneous and small group. The multiplicity of vertical and horizontal connections may impair organizational efficiency.
Dual reporting romantic relationship in matrix business can contribute to indiscipline, ambiguity and role discord.
A virtual group is a momentary network between lots of companies that come together to perform a specific enterprise. Additionally it is network structure. It is intended to exploit fast changing opportunities and share skills and even helps usage of global markets. Each engaging company contributes what it does best.
Virtual organization have been created by large companies such as IBM, Apple, Ford, etc. though there is absolutely no pub on small companies to produce such organizations. Network organization is well suited for all endeavours which requires high versatility to react quickly to changing environment.
However, virtual firm may have problems with two problems. Firstly, there could be lack of close control over production operations. Secondly, there may be doubt in the trustworthiness of the companions.
According to Bums and Stalker, "Mechanistic structure is one that is highly centralized and has common elements of bureaucracy. " It lays emphasis on formal authority and communication habits. Within a mechanistic organization structure, there are rigid specialist responsibility romantic relationship, formal string of command word and fixed structure of communication. Thus, the users cannot connect across all degrees of the organization to obtain information.
According to Bums and Stalker, "Organic composition is one which is characterized by high amount of decentralisation and versatility and under which specific are more likely to work in an organization setting alternatively than only. " In an organic structure, the organizational customers converse across all degrees of the organization to acquire information.
CASE STUDY-Asea Dark brown Boveri
Asea Dark brown Boveri Limited (ABB) was produced as a result of merger between Sweden centered anatomist group Asea AB and Switzerland established Brown Boveri limited. Mr Barnevic got over as the CEO of ABB after the new entity ABB was formed. Poor tactical decisions and other HR related problems in the end resulted in poor performance of ABB. Then Barnevic unveiled the matrix based structure to assimilate worldwide activities of ABB. The dual reporting made certain that both product specific pursuits as well as geographical interests were taken care of. ABB reaped many benefits by employing the matrix established structure. By doing this ABB achieved subsequent growth running a business results.
We have to analyse how matrix structure is successful in owning a business successfully and is it that matrix composition always contributes to success.
After reading the case, I believe matrix organization framework cannot always bring the success. Matrix business framework has some drawbacks as well as some advantages.
Despite getting a great deal of advantages, matrix organization buildings have been criticized as having lots of drawbacks. These are in many cases become costly to keep up, partly because of more multifarious reporting requirements. In addition, many professionals become worried by the lack of a string of command and the incapacity to understand who is in control. The most common criticisms of matrix business structure is that it brings about role ambiguity and disagreement. For instance, a functional administrator may ask a subordinate a very important factor, and then a product/project administrator will tell him or her different things. As a result, companies that change to matrix structure of management often experience high turnover and worker displeasure.
So it isn't necessary that matrix business structure always bring success.
In days gone by, companies such as Unilever and ABB show that matrix organizations may well not always be successful. It was the matrix structure that almost ruined ABB, and Unilever in addition has experienced difficulty in taking care of the organization by applying the matrix framework.
The reasons for inability are as follows
Matrix organizations normally do not speak about clear lower accountability for everybody. Professionals need to take decisions and allow responsibility. Matrix organizations, on the other side, often have problems with panic of earning mistakes when confronted with the growing size of an enterprise.
The prime responsibility of a business is to provide its customers first. Insurance firms matrix composition the organizations cannot serve the customers properly because of slow-moving decision making process.
In matrix organizations one can find high degree of uncertainty, lack of clarity about the task and gradual decision making processes.
We found out that matrix structure does not always ensure the success of a business. The success depends upon the nature and degree of its execution.
One advantage of matrix structure is that dual reporting ensures both physical pursuits as well as product specific hobbies are looked after. It also ensures the proper information movement through the organization.
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