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An organizational structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims. 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.

Behavior Structure, Process and Design

CONTENTS

TITLES PAGE NO

7.1. Behavior Structure 1

7.2. Organization Culture 1

7.3. Organizational Development 9

7.4. Organization Process/Structure 16

7.5. Dimensions Of Organization Structure 19

7.6. Organizational Design 22

7.7. Traditional Organizational Structure 26

7.8. Contemporary Organizational Designs 33

Department of MBA, Govt RC college


7.1 - BEHAVIOUR STRUCTURE

Behavior structure of organization deals with :

1) Organization Culture

2) Organization Development

7.2 – ORGANIZATION CULTURE :

7.2.1 - Meaning and Definition of Organizational Culture

Organizational culture is accumulated tradition of the organizational

functioning. It is based on certain values, norms and positive attitudes of an

organization. Organizational environment becomes a culture if it is used for

motivating people to avoid any friction and adopt the valuable tradition of the

organization. The success of any organization depends on the culture, as it is the

invisible power governing the organization.According to O’Rellly,” Organizational

culture is the set of assumptions, beliefs, values and norms that are shared by an

organization’s members”.

TABLE: Formal components of Organizational Culture :

1) Mission/vision The milestones to be

reached.

Could be unrealistic.

2) Policies Statements designed to

be guidelines to

behavioral decision.

Policies, if not drafted

properly can provide

leeway.

3) Procedures Methods of providing

specific guidelines.

Can facilitate or

create obstacles in

smooth functioning.

4) Rules Specific Instructions for Rules could be a



performing a task. means or an end in

themselves.

5) State f Organizational

development.

Organization at young,

growing, maturing or

mature stage of

development

Stage of

organizational

development has

direct impact on work

culture.

7.2.2 - Characteristics of Organizational Culture :

1) Individual initiative.

2) Risk Tolerance.

3) Direction.

4) Integration.

5) Management Support.

6) Control.

7) Identity.

8) Reward system.

9) Communication Patterns.

7.2.3 - Functions of Organizational Culture:-

1) Organization is recognized by its culture. Whenever people name an

organization, the culture attached to the organization is immediately

remembered. One organization is immediately remembered. One

organization is distinctively different from other organizations by its culture.



2) Organizational Culture makes the boundary beyond which no employees are

permitted to go. They automatically adopt the limit known as a cultural

limit.

3) A number of organizations are well recognized by the culture. They are

given a sense of pride and identity by the public.

4) Organizational culture provides the facilities for self-satisfaction. Employees

get internal satisfaction with an esteemed culture. People are more satisfied

this way than when their individual interests are fulfilled.

5) The culture of an organization provides its stability. People prefer to

continue with the organization. Employees, customers, financiers and other

related persons prefer to remain with the organization.

6) The social recognition of the organizational culture makes the organization

grow and develop in all dimensions.

7) Employees get an opportunity to set the standards of performance. They try

to achieve the standards. It becomes a self-control mechanism which helps

the organization to grow and flourish.

8) The attitude and the behavior of the employees are directed towards the

achievement of goals through a sound culture.

9) Organizational culture acts as a motivator that guides and controls the

employees.

7.2.4 - ELEMENTS OF CULTURE:-

Artifacts: artifacts are the physical things that are found that have particular

symbolism.

Stories, histories, myths, legends, joke.

Rituals, rites, ceremonies, celebrations.



Heroes: idealized examples by which cultural members learn about the

‘perfect behavior’.

Symbols and symbolic actions: symbols can also be used to indicate status

within a culture. This includes clothing, office décor and so on.

Beliefs, assumptions and mental models.

Attitude.

Rules, norms, ethical codes and values.

7.2.5 - LEVELS OF ORGANIZATION CULTURE:

According to Edgar schein organizational culture has three levels. These are:

1) Observable Artifacts: These are the symbols of culture in the physical and

social work environment and are most visible and accessible. Among he

artifacts of culture are the following:-

i. Organizational heroes: As a reflection of the organization’s

philosophy, this dimension concerns the behavior of

organizational members, specially the behavior of top

management and their leadership styles.

ii. Ceremonies and rites: This reflects the activities that are

enacted repeatedly on important occasions.

iii. Stories: Lavin son and Rosenthal suggest that stories and myths

about organization’s heroes are powerful tools to reinforce

cultural values throughout the organization an specially n

0rienting new employees.

iv. Cultural Symbols: Certain code of dress or a company logo can

reflect its values and orientations.



2) Shared Values: Values reflect a person’s underlying belief as to what

should be and what should not be. Values are what those principles and

qualities that shapes our thinking and behavior.

3) Common Assumptions: These are deeply held beliefs that are not

objectively observable but manifest themselves in the behavior of people so

strongly that any violation of such beliefs would be unthinkable.

7.2.6 - PROCESS OF CREATING ORGANIZATIONAL CULTURE:-

Organizational culture is a long-term proposition that must satisfy the

members needs and values and match the cultural requirements of the society of

which the organization is a part. Therefore, the organization has to develop a

culture which is conducive to both the members in it and social culture.

Figure: 1 Process of organizational culture


Establishing values

Creating vision

Operationalizin

g values and visio

n

Socialization of

employees


7.2.7 - MAINTAINING ORGANIZATIONAL CULTURE:-

After the organizational culture is created and developed, the next step is to

maintain it.

Figure 2: Model of managing Organizational Culture

1) Selection of Entry-Level Personnel

2) Placement on the Job.

3) Job Mastery.

The emotionally balanced employees easily adjust and encounter the

initial cultural shock and concentrate on mastery of their jobs. Superiors and

trainers help the employees in this process.


Start

Careful selection of entry

level candidat

es

Deselct

Consistent role

model

Humility inducing experiences

promote openess towards accepting

organizational norms and values.

Reinforcing

Adherence to values

enables the reconciliati

on of personal sacrifces

In-the trenches training leads

to mastery of a core discipline.

Rewards and control systems are

meticulously refined to einforce behavior that

is deemed vital to success in the market

place.


1) Measuring and Rewarding Performance: - Employees performance is

measured and rewarded based on performance.

2) Adherence to Core Values:- At this stage, the employees are inspired and

encouraged o adhere to the company’s core values even by sacrificing their

personal comforts like missing weekends, working long hours and taking up

inconvenient job assignments.

3) Reinforcing the Stories and Folklore: At this stage, companies reinforce

organizational folklore.

4) Recognition and Promotion: Management maintains culture by recognizing

and promoting the employees who serve as role models in implementing the

cultural values.

7.2.8 - MERITS OF ORGANIZATIONAL CULTURE:-

1) Culture keeps the people together and increases the cohesiveness or bondage

among its members.

2) Culture performs boundary- defining role.

3) It conveys a sense of identity among the members.

4) It creates a social system of shared values.

7.2.9 - DEMERITS OF ORGANIZATIONAL CULTURE:-

1) When the organization is operating as a dynamic environment, culture does

not allow the organization to change in accordance with the environmental

demands.

2) New entrants bring diversified cultures into the organization. But the strong

cultures demand new employees to confirm to its values rather than

modifying it through their diversified culture, whatsoever their merits may

be.



3) Many business alliances like mergers and acquisitions, today, are tending

towards divorcé due to the strong cultures of the partners to the alliance.

Thus, change in organizational culture is necessary in order to allow the

organization o change in accordance with the environment and to act as a

change agent to the environment.



7.3 – ORGANIZATION DEVELOPMENT

7.3.1 – Meaning and Definition

Theory and practice of planned, systematic change in theattitudes, beliefs,

and values of the employees through creation and reinforcement of long

term training programs. OD is action oriented. It starts with a careful organization

wide analysis of the current situation and of the futurerequirements, and

employs techniques of behavioral sciences such as behavior modeling, sensitivity

training, andtransactional analysis. Its objective is to enable theorganization in

adopting-better to the fast-changingexternal environment of

new markets, regulations, and technologies.

7.3.2 - Objectives of Organizational Development:

As objectives of organizational development are framed keeping in view

specific situations, they vary from one situation to another. In other words, these

programs are tailored to meet the requirements of a particular situation. But

broadly speaking, all organizational development programs try to achieve the

following objectives:

• Making individuals in the organization aware of the vision of the organization

Organizational development helps in making employees align with the vision of

the organization.

• Encouraging employees to solve problems instead of avoiding them.

• Strengthening inter-personnel trust, cooperation, and communication for the

successful achievement of organizational goals.

• Encourage every individual to participate in the process of planning, thus making

them feel responsible for the implementation of the plan.

• Creating a work atmosphere in which employees are encouraged to work and

participate enthusiastically.



• Replacing formal lines of authority with personal knowledge and skill.

• Creating an environment of trust so that employees willingly accept change.

According to organizational development thinking, organization development

provides managers with a vehicle for introducing change systematically by

applying a broad selection of management techniques. This, in turn, leads to

greater personal, group, and organizational effectiveness.

7.3.3 - Organizational Development Process

The organizational development process consists of three major steps: diagnosis,

intervention and evaluation. These steps are similar with the planned change

process, since organizational development is actually a specialized type of change

effort. An organizational development process is most likely to be initiated when

top management believes that there are deficiencies in the way the overall

organization is functioning.

Diagnosis: The first step involves diagnosis of the present situation. Change agents

collect the required information through interviews, questionnaires, internal

documents, records, and reports. Usually, a diagnostic strategy is developed using

two or more methods of data collection after their respective strengths and

weaknesses have been considered.

Intervention: After the situation is diagnosed, organizational development

interventions or change strategies can be designed and implemented with the help

of a change agent. Some of the organizational development intervention techniques

are:



• Process consultation: This is concerned with interpersonal relations and

functioning of work groups. The organizational development change agent

observes the group and gives feedback regarding dysfunctions in areas of decision

making, handling conflicts, and communication patterns.

• Team building: This technique is used to help work groups become effective in

performing their tasks. The organizational development consultant helps in

assessing group tasks, member roles, and strategies for accomplishing work tasks.

• Third-party intervention: Here, organizational development consultants help

the parties concerned to resolve their differences through techniques like problem

solving and conciliation.

• Survey Feedback: In survey feedback, data gathered through survey

questionnaires and personal interviews are analyzed, tabulated into understandable

form and shared with those who first supplied the information. Survey feedback

lets people know where they stand in relation to others on important organizational

issues thus helping them resolve conflicts in a constructive manner. Effective

feedback should be relevant, understandable, descriptive, verifiable, and inspiring.

• Techno structural activities: This technique is used to improve work

technology and organization structure. It is intended to help employees evaluate

themselves and to make appropriate changes in task design, work methods, and

organization structure.

• Skill development: This technique is used to help employees identify their

shortcomings and overcome their deficiencies. It is used to improve performance

in areas such as delegation, problem solving conflict resolution, and leading.



Evaluation: Since organizational development is directed towards long-term

change, organizational development programs have to be monitored on a regular

basis. An accurate evaluation of organizational development interventions is

dependent on the accurate diagnosis of the current situation and the clear

identification of the desired results.

7.3.4 - Benefits of Organizational Development

Could your business or organization benefit from high efficiency and

productivity? Are you working geared towards improving team effectiveness,

customer service and team quality? Well, organizational development is designed

to help you improve on these areas, through performance improvement techniques.

1. Environmental impact

Organizational development aims to create job satisfaction, which is equals life

satisfaction. We all know that the workplace environment plays a role on how we

execute our set of responsibilities. In the same way that employment is important

for the employees, job satisfaction directly influences life satisfaction as well.

2. Reduces absenteeism

According to recent findings, satisfied employees tend to be present often. Some

cases of absenteeism might be due to medical reasons. However, organizational

development helps to predict involuntary absenteeism like surgery, and is done

away with through physical exams.

3. Improves quality and productivity

The major benefit of organizational development is that it helps improve

productivity, as well as quality. Improving quality means your business has a


http://benefitof.net/benefits-of-team-work/

http://benefitof.net/benefits-of-business-intelligence/


competitive edge over other competitors. Additionally, it increases productivity

which helps in making quality products; thereby there is no need for rework.

4. Encourages self-improvement

There are numerous benefits associated to personnel training. For this reason, it is

essential to consider organizational development as a training tool for business and

individual self-development and improvement.

5. Helps in conflict resolution

With organizational development, conflict is resolved constructively in such a way

that promotes innovation, and does not interfere with productivity. Additionally,

employees are compensated for success to improve their productivity.

6. Encourages open communication

Communication is open, vertically and laterally, and all feelings and facts are

shared. This proves to be an effective strategy since it allows employees to learn

from personal experience.

Apart from having numerous benefits, organizational development also has its

share of disadvantages as well. It is expensive and time consuming since every

employee has to undergo extensive training.

7.3.5 – Limitations of Organization Development :

1. Organisation development can be no more powerful than the behavioural

science concepts on which it rests. Behavioral science itself has various limitations,

and these are applicable to OD also.



2. There are some persons, specially complacent ones who are not prepared to

apply diligence of effort for improvement and the methods of work involved in OD

are sometimes not of sufficient strength to challenge the motivation of highly

complacent people.

3. Task of the organisation and the characteristics of its membership also put

limitation on the effectives of OD. Thus OD cannot be applied without giving due

regard for the local circumstances existing within any given organisation. For

example, Research and Development a organisations are less responsive to change

potential of OD.

It may be emphasised here that, as with any new strategy, some criticisms

are justified because of mistakes. However, OD can be treated as a more in the

correct direction.

7.3.6 - Organization Development Interventions:

OD interventions are plans or programs comprised of specific activities

designed to effect change in some facet of an organization. Numerous

interventions have been developed over the years to address different problems or

create various results. However, they all are geared toward the goal of improving

the entire organization through change.

In general, organizations that wish to achieve a high degree of organizational

change will employ a full range of interventions, including those designed to

transform individual and group behavior and attitudes. Entities attempting smaller

changes will stop short of those goals, applying interventions targeted primarily

toward operating policies, management structures, worker skills, and personnel

policies.



OD interventions can be categorized in a number of ways, including function, the

type of group for which they are intended, or the industry to which they apply. In

fact, W.L. French identified 13 major "families" of interventions based on the type

of activities that they included—activity groups included teambuilding, survey

feedback, structural change, and career-planning.

Figure An Action Research Model for Organizational Development



7.4 - ORGANIZATION PROCESS/STRUCTURE

Organization structure refers to hierarchical arrangement of various

positions in the enterprise. It also defines the relationship between various

positions, departments and persons. It helps in allocating authority and

responsibility formally and decides who is to report whom and who is direct to

whom. It defines the position of the persons in the organization.

7.4.1-Features of good Organization Structure:

1. Simplicity

2. Flexibility

3. Clear Line of Authority

4. Application of ultimate Responsibility

5. Proper Delegation of Authority

6. Minimum possible managerial levels

7. Principles of Unity of Direction and command

8. Proper Emphasis on Staff

9. Provision for Top Management

7.4.2-Importance of Organizational Structure :

1. Specialization

2. Well Defined Jobs

3. Clarifies Authority and Power

4. Avoiding Duplication of work

5. Co-ordination

6. Source of Support and Security

7. Adoption



7.4.3- Role of Organization Structure :

1. Facilitating Management Action

2. Encouraging Efficiency

3. Communication

4. Optimum Use of Organization Resources

5. Stimulating Creativity

6. Job Satisfaction

7.4.4-Determinants of Organization Structure:

1) Environment : Organizations are open systems that continuously interact with

the outside environment. The macro-environment of business today has

considerable impact on the internal operations of the organization, especially if

the organization is a large one. These external factors include the customers,

cultural and economic conditions as well as international environment. The

organizational structure would depend upon whether there are dynamic and

rapid changes in it.

2) Technology : It is the combinations of tools, techniques and know-how and has

major influences on organizational structure that would depend upon whether

the technology is simple and routine requiring few repetitive tasks.


Environment

Technology

Size

StrategyOrganizational

Structure


3) Size : The size of the organization is measured by the number of people

working in the organization would determine as to which type of structure

would be more effective for it.

4) Strategy of the Organization : It is defined as “the determination of the basic

long-term goals and objectives of an enterprise, and the adoption of courses of

action and the allocation of resources necessary for carrying out these goals.”



7.5 – DIMENSIONS OF ORGANIZATION STRUCTURE

7.5.1 - Work specialization

Work specialization (also called division of labour) is the degree to which

organizational tasks are sub-divided into individual jobs. With too much

specialization, employees are isolated and do only a single, tiny, boring job. Many

organizations enlarge jobs or rotate assigned tasks to provide greater challenges.

7.5.2 – Departmentalization :

Departmentalization is the basis on which individuals are grouped into

departments and departments into total organizations. Approach options include:

1. Functional - by common skills and work tasks

2. Divisional - common product, program or geographical location

3. Matrix - combination of Functional and Divisional

4. Team - to accomplish specific tasks

5. Network - departments are independent providing functions for a central

core breaker

Few Common Types of Departmentalization :

Functional departmentalization

Product departmentalization

Customer departmentalization

Geographic departmentalization

Process departmentalization


http://en.wikipedia.org/wiki/Division_of_labour


7.5.3 - Span of management :

Factors influencing larger span of management.

1. Work performed by subordinates is stable and routine.

2. Subordinates perform similar work tasks.

3. Subordinates are concentrated in a single location.

4. Subordinates are highly trained and need little direction in performing tasks.

5. Rules and procedures defining task activities are available.

6. Support systems and personnel are available for the managers.

7. Little time is required in non-supervisory activities such as coordination with

other departments or planning.

8. Managers' personal preferences and styles favour a large span.

7.5.4 - Authority, responsibility, and accountability :

Authority is a manager's formal and legitimate right to make decisions, issue

orders, and allocate resources to achieve organizationally desired outcomes.

Responsibility means an employee's duty to perform assigned task or activities.

Accountability means that those with authority and responsibility must report

and justify task outcomes to those above them in the chain of command.

7.5.5 - Delegation Of Authority :

Delegation is the process managers use to transfer authority and

responsibility to positions below them. Organizations today tend to encourage

delegation from highest to lowest possible levels. Delegation can improve

flexibility to meet customers’ needs and adaptation to competitive environments.

Managers often find delegation difficult.



Types of authority (and responsibility) :

Line authority

Functional authority

Staff authority

7.5.6 - Centralization, decentralization, and formalization :

Centralization - The location of decision making authority near top

organizational levels.

Decentralization - The location of decision making authority near lower

organizational levels.

Formalization - The written documentation used to direct and control

employees.



7.6 - ORGANIZATIONAL DESIGN

7.6.1 – Meaning of Organizational Design :

It is the design of an Organizational structure where organizational structure

is the design of the pattern of positions and functions in the organization.

Organizational design includes structure as well as the design of the organizational

process of work, in particular decision making process.

7.6.2 - Factors to be considered while Designing Organizational Structure :

While designing a structure, the following points should be given adequate

consideration.

1.Departmentation: Departmentation is the process of arranging work to form

positions functions, and other organisational elements.There are several ways of

departmentation. However, any base should provide

facility in co-ordination

advantages of specialisation,

minimum cost,

emphasise on important activities,

consideration of internal and external factors, and external factors, and

development of individuals. Departmentation is not a fixed pattern, it

should be checked and analysed from time to time to make necessary

adjustment according to changes in internal an external variables.



2. Balancing. Each function should be given its proper emphasis with respect to its

basic purpose in the organisation. Each element of the organisation should be seen

in the context of total structure because no decision can be taken on a particular

element in isolation. Compromise in various elements gives a balanced and

workable organization structure.

3.Focusing of Operating Responsibility. The work assignment creates

responsibility. Organisation structure should clearly define the responsibility of all

the individuals so that they exactly know what is expected of them. Clearly defined

responsibility helps in delegating appropriate authority to various level. Moreover,

when responsibility is clearly defined, the persons can be trained accordingly to

occupy the position.

4. Establishing Span. Span of management, supervision, or control refers to the

number of people one manager can supervise. There is a limit on this number;

however, arbitrary designation of limits on number is misleading. In practice, the

span may vary widely because a number of factors determine this. The span should

be decided on the basis of its needs at various levels of organisation

5. Facilitating Units. Departmentation and responsibility centres provide as to

who will perform the work. The persons heading the responsibility centres need the

help of facilitating units which are created in the organisation. These units may be

organised in the form of departments, sectors, or committees. In organising these

units, factors like co-ordination of operating units, consistent action throughout the

organisation, provision for adequate importance and control, and common use of

specialised facilities should be considered.



6. Continuity. The structure is determined for future period also. As such, it

should be designed in such a way that it helps in achieving the objectives of near

future also. For this purpose, the structure should be kept flexible enough so that it

can be adjusted to changing conditions.

7.6.3 – Importance of Organizational Design :

1. Dealing with contingencies. A contingency is an event that might occur and

must be planned for such as a changing environment.

2. Gaining Competitive Advantage. Increasingly, Organizations are discovering

that organization design is a source of sustained competitive advantage.

3. Managing Diversity. Differences in the race, gender, and national origins of the

organizational members have important implications for the values of an

organization’s effectiveness.

4. Efficiency and Innovation. Organizations exists to produce goods and services

that people value. The better organization function, the more value.

7.6.4 – Models of Organizational Design :

1. Mechanistic Model:

i. Extensive Departmentalization

ii. High Formalization

iii. A limited information network

iv. Centralization

2. Organic model:

i. Cross Hierarchical and cross functional teams

ii. Low formalization



iii. Comprehensive information network

iv. High participation in decision-making

7.6.5 – Types of Organizational Structure :

1) Traditional Organizational structure/Design

2) Contemporary Organizational Designs



7.7 - TRADITIONAL ORGANIZATIONAL STRUCTURE

1. Line or military organization

2. Line and staff organization

3. Functional Organization

4. Divisional Organization

1.Line or Military Organization :

It is the one in which all managers have direct authority over their respective

subordinates through the chain of command. Authority flows directly from top to

bottom through various managerial positions. Each superior is and who authority

to issue order.

Features of Line Organization :

It is a simple type of organization.

Only one form of authority viz line authority exists in this form of

organization.

The authority relationships are clearly established.

All the managers in the line organizations have full authority to decide

things to act with respect to their respective function.

In this Line Organization, departments are created for basis activities each of

which is self continued as the related services are also part of the activities

of the departmental heard.

Advantages of Line Organization:

1. Simplicity

2. Identification of authority and responsibility

3. Co-Ordination



4. Effective Communication

5. Quick Decisions

6. Unity of Command

7. Effective Control and supervision

8. Executive Development

9. Flexibility

Disadvantages of Line Organization:

1. Excess work

2. Lack of specialization

3. Lack of Co-ordination

4. Improper Communication

5. Favoritism

6. Lack of initiative

7. Instability

2. Line and staff Organization :

The line and staff organization refers to an organization in which two type of

authority relationships coexist they are direct or line authority and advisory

authority.

The line authority flows downward And staff authority plows upward :

1. Executive assistant to the managing director

2. Legal Advisor to the Organization

3. Quality control manager

4. Personnel Officer



Types of Staff :

1.Personal Staff :

Personal Staff means a person who assists another person in the performance

of a work effectively under such circumstances the work of the line officer’s could

not be delecated to others.

2.Specialized Staff:

The Specialized Staff officer’s render service to the line officer’s at all levels

of the organization. The specialized staff officer offer advice with some limited

provisions. These provisions are imposed by the management.

3.General Staff Assistant:

General Staff assistant are a group of person’s who are rendering services as

advisors to top management in specialized matters. The primary feature of the

general staff is that they give advice regarding overall plans and policies of the

organization. But they are not specialized in any area.

Functions of Staff:

1. The Staff officers assists the line officers in the planning of business activity.

2. The board of directors frame the policies of the business on the basis of

recommendations given by the staff officers.

3. The managers can get the advice from the staff officers regarding the

selection, training, placement and remuneration fixation of the personnel.

4. Staff officers of a department help the manager in the preparation of budget of

the department.



Advantages of Line and Staff Organization:

1.Specialization

2.Better Discipline

3.Balanced and Prompt Decisions

4.Growth and Expansion

5.Development of Employees

6.Lesser Burden on Line Officers

Disadvantages of Line and Staff Organization:

1.Conflict between Line and Staff Organization.

2.Lack of Responsibility.

3.More dependence on staff.

4.Lack of co-ordination.

5.Ineffective staff.

6.Expensive.



3. Functional Organization:

It is the type of organization where line,staff and functional authority exist

together. It is limited form of the line authority given to functional experts over

certain specialized activities under the normal supervision of mangers belonging to

other departments. Managers who are given functional authority have the right to

issue directives on matters over which they do not have direct line authority

otherwise.

Features of Functional Organization:

1. It is more complex organization than line organization and line and staff

organization.

2. Three types of authority relationships exists.

3. More importance is given to the staff specialists.

4. The principle of unity of command does not apply to this form of

organization,managers and others get instruction from more than one

superior.

Advantages of Functional Organization:

1.Specializaion.

2.Increase in Efficiency

3.Scope for Growth

4.Flexibility

5.Relief to top Executives

6.Economy of Operations



7.Better Supervision

8.Democratic control

Disadvantages of Functioinal Organization:

1. Conflict in authority

2. Lack of co-ordination

3. Difficulty in fixing responsibility

4. Delay in taking Dicisions

5. Poor Descipline

6. Expensive

7. Group Rivelris

8. Application of Expert Knowledge

9. Mass production

10. Economy

11. Complex Relationships

12. Cenralization



4. Divisional Structure :

The second basic structure form employed by organizations is the divisional

structure. While growth through expansion of some line of business forces a small

organization to recognize on functional basis,growth through gographic and

product diversification necessitates the adoption of divisional structure.

Advantages of Divisional Structure :

1. Divisional structure emphasizes on the end result,that is, on product,or

customer through which revenue is generated in the organization.

2. Since a division focuses its attension on a particular product or service,its

performance measurement is easier as the performance can be measured in

the light of contributions made by the division.

3. There is a high level managerial motivation because managers work in the

environment of autonomy.

4. Through divisional structure,more managers with general outlook can be

developed who can easily take up the job at the corporate level. Thus there is

no problem in managerial succession.

5. Organizational size can be increased without any as new divisions can be

opened without disturbing the existing system.

Disadvantages of Divisional Structure :

1. It is quite costly because all the facilities have to be arranged for each other.

2. Lack of emphasis of functional specialization.

3. Lack of Managerial personnel.

4. Control system is major problem of divisionalization.



7.8 - CONTEMPORARY ORGANIZATIONAL DESIGN

7.8.1-Project Mnagement :

Features Of Project Organization:

project organization has been found to be of great great use under the

following situations:

1. The company gets one time assignments or a big contract in addition to its

regular activiteis. The assignment should be definable in tern of a single,

specific goal.

2. The assignment or project is unique. Infrequent and unfamiliar to the present

organization.

3. The project is complex and calls for high degree of interdependence among

the tasks.

4. The project assignment to be completed within the time limit prescribed by

the client. There may be a penalty clause if the project is not completed in

time.

5. Successful completion of the project is essential as the image of the

company is at stake.

Advantage of project organization:

The advantage of project organization are as follows:

1. Project organization can be tailored to meet the requirements of a particular

project. It enables the organizations to adopt to environmental demands

particularly when environmental factors are fast changing.



2. Project organization allows maximum use of specialized knowledge available

with the organization, Specialists gets higher satisfaction while working on

complex projects. Knowledge and skills can be transferred from one

particular project to another.

Limitations of project organization:

A project manager has to face unusual problems resulting from the project

organization. Following problems are usually experienced in project organization:

1. Project organization creates a feeling of insecurity and uncertainty among

people in organization. It is an adhoc arrangement with limited life.

Therefore, a question comes in mind of people what will happen after the

project is over.

2. People are not able to identify themselves with any particular department

of organization because they do not have permanent tenure with any

project. Thus there is lack of loyalty and feeling of belongingness in

people towards organization.

3. The project manager has to deal with specialist from a number of diverse

field. The specialists often have different types of orientations and

interests.

4. The job of the project manager becomes difficult because of lack of

clearly defined responsibility, lack of clear communication pattern and

lack of standards of performance of various professionals.

5. Decision making is made very difficult because there are unusual

pressures from diverse fields.



7.8.2-The Matrix Design :

Very popular organization design is the “Matrix design”. This design

combines two forms departmentalization.

Functional

Product

The matrix design attempts to gain in the strength of both these forms of

departmentalization while avoiding the weakness.

Advantages of matrix design :

1. It facilitates coordination when the organization has a multiplicity of

complex and independent activities.

2. The direct and frequent contact between different experts in the matrix can

provide for better communication and more flexibility.\

3. The matrix reduces the drawbacks of bureaucratic design. The dual lines of

authority reduces the tendency of departmental heads to put their

departmental goals first before the organizational goals.

4. The matrix facilitates the efficient allocation of specialists. When individuals

who are specialists in particular lodged in the functional department or

product group, their talents are monopolized and underultilized.

Disadvantages of Matrix design :

1. The matrix design creates the confusion in the organization. When there is a

dual chain of command, ambiguity increases and ambiguity leads to conflict.

2. The matrix has the propensity to foster power struggles. In bureaucracy, the

rules of the game are defined which reduces the potential for power grabs.



3. This design put a lot of pressure and stress on the individual employees.

Dual unity of command introduces role conflicts and unclear expectations

introduce role ambiguity.

7.8.3-Horizontal Organizations :

Horizontal designs replace the traditional vertical, hierarchical organization,

The advanced information technology and globalization environment, suggests the

use of horizontal structure to facilitate cooperartion,teamwork, and a customer

rather than functional orientation.

The following guiding principles that define horizontal organization design :

1. Organization revolves around the process, not the risk

2. Hierarchy is flattened

3. Teams are used to manage everything

4. Customers Drive Performance

5. Team performance is rewarded

6. Supplier and customer contact is maximized

7. All employees need to be fully informed and trained


final ob

Business

levels of organization

artifacts of culture

symbols of culture

organizational culture

work culture

esteemed culture

sound culture

elements of culture