Engineering Management
Module-III
Basic Organizational Design & HRM
Lecturer Muhammad Kashif Farooq
MS Mechanical Engineering
Learning Outcomes
▪ Define organization & organization structure
▪ List the factors that affect organization structure
▪ Basic Elements of Organizational Structure Design
▪ Traditional Organizational Designs
▪ Human Resource Management (HRM)
Organization
▪ Organization: Groups of people who
must coordinate their activities in
order to meet organizational
objectives.
▪ Coordination Function
▪ Requires strong communication.
▪ Involves understanding people’s
relationships and interdependencies.
Organizational Structure
▪ Organizational structure is the formal arrangement
of jobs within an organization.
▪ It determines each employee’s place and role in the
business.
▪ This structure, which can be shown visually in an
organizational chart, also serves many purposes.
▪ Organizations of all sizes require an established,
organized structure to drive business outcomes.
▪ There is no such thing as a good or bad organizational
structure; there are only appropriate or inappropriate
ones.
“When managers create or change the structure, they
are engaged in organizational design”
Organizational Structure Factors
▪Influenced by technology and its rate of change.
▪Shaped by complexity and resource availability.
▪Determined by the nature of products/services and
competition.
▪Guided by decision-making requirements.
Basic Elements of Organizational Structure Design
▪ Work specialization
▪ Departmentalization
▪ Chain of command
▪ Span of control
▪ Centralization/Decentralization
▪ Formalization
Work Specialization
▪ It is dividing work activities into separate job tasks.
▪ Individual employees “specialize” in doing part of an activity rather than the
entire activity in order to increase work output.
▪ It’s also known as division of labor.
▪ It makes efficient use of the diversity of skills that workers have.
Work Specialization
▪ Initially, specialization was a powerful
tool for increasing efficiency because
it allowed workers to become experts
in narrowly defined tasks.
▪ . At some point, the human
diseconomies from division of labor—
boredom, fatigue, stress, low
productivity, poor quality, increased
absenteeism, and high turnover—
exceed the economic advantages.
Departmentalization
▪ After deciding what job tasks will be done by
whom, common work activities need to be
grouped back together so work gets done in a
coordinated and integrated way.
▪ Departmentalization is the process of grouping
related jobs or tasks into departments after
assigning specific duties, so that work can be
coordinated and completed efficiently.
Chain of Command
▪ It is the line of authority extending from upper organizational levels
to lower levels, which clarifies who reports to whom.
▪ The four important concepts in chain of command are: authority,
responsibility, accountability and unity of command.
▪ Authority: The rights or power granted to individuals (due to their
position) to tell people what to do and to expect them to do it.
Acceptance theory of authority:
“Authority comes from the willingness of subordinates to accept it”
Chain of Command…
▪ Responsibility is the obligation incurred by individuals in their roles in
the formal organization to effectively perform assignments.
▪ When managers assign tasks, employees are obligated to carry them out.
▪ Accountability is being answerable for the satisfactory completion of a
specific assignment. (Accountability = Authority + Responsibility.)
▪ No one should be held responsible or accountable for work tasks over which he
or she has no authority to complete those tasks.
Unity of Command Principle: It states that a person should report to only
one manager.
▪ Without unity of command, conflicting demands from multiple bosses may create
problems
Span of Control
▪ Span of control regulates the number of direct reporters managed by
a single supervisor.
▪ It determines the number of levels and managers in an organization.
▪ All other things being equal, the wider or larger the span, the more efficient
an organization is.
Centralization and Decentralization
▪ Centralization is the degree to which decision making takes place at
upper levels of the organization.
▪ On the other hand, the more that lower-level employees provide
input or actually make decisions, the more decentralization there is.
Formalization
▪ Formalization determines to which extent business processes,
policies, and job descriptions are standardized.
▪ In highly formalized organizations, there are explicit job descriptions,
numerous organizational rules, and clearly defined procedures
covering work processes.
▪ Employees have little discretion over what’s done, when it’s done,
and how it’s done.
Traditional Organizational Designs
1. Simple Structure:
▪ Most basic structure, typically found in small businesses
Characteristics:
▪ Low departmentalization
▪ Wide span of control
▪ Authority centralized in one person
▪ Minimal Formalization
Example: A handful of baristas report directly to the owner
Organizational Structures
▪ An organizational structure helps define the hierarchy, relationships,
roles and responsibilities within a corporation or organization.
▪ These structures can be established in a variety of ways depending
upon the size and purpose of the organization. Three common
organizational structures will be discussed here:
▪ Simple
▪ Functional Structure
▪ Divisional Structure
1. Simple Structure
As the organization grows and more employees are added, structure
tends to be more specialized and formalized.
▪ Rules & regulations are introduced.
▪ Work becomes more specialized
▪ Creation of distinct departments
▪ Addition of management levels
▪ Organization becomes increasingly bureaucratic.
▪ At this point, managers might choose a functional structure or a
divisional structure.
2. Functional Structure
▪ Functional structure is when you run a company or organization by grouping
employees together according to their area of expertise, specialization or
function.
▪ These departments each perform their own duties and responsibilities with
their own goals and measurements of success.
e.g., Marketing, Sales, HR, Communication, R&D, Production, Operations etc.
▪ Within each department, you have leaders, like vice presidents, directors or
department managers, for example.
▪ Department leaders often have a strong background and experience in their
respective fields and help their departments reach goals and achieve success.
3. Divisional Structure
▪ The structure under which jobs related to one product are grouped
under one department is known as Divisional Structure.
▪ Such a type of structure is suitable for organizations that have more
than one category of products to offer.
▪ The organization is divided into separate units or divisions, and each
division is managed by a divisional manager.
▪ For example, if an organization has four divisions, then each
department will have a separate department for production,
marketing, finance, etc.
Strengths and Weaknesses
Self Study
7 Differences between Functional Structure and Divisional Structure
Human Resource Management
Human Resource Management (HRM)
▪ Human resource management (HRM) is the practice of recruiting,
hiring, deploying and managing an organization's employees.
▪ HR department is usually responsible for developing, enforcing and
overseeing policies governing workers, their mental and emotional
well-being and the relationship of the organization with its
employees.
HRM Importance
▪ HRM methodology views employees as valuable assets (human
capital)
Principle: Employees bring value to a company. Investing in employees
and strategically supporting their needs…
▪ Enhances job satisfaction
▪ Boosts motivation
Well-trained, competent, valued, and supported employees are more
likely to:
▪ Possess the skills needed to execute company goals
▪ Feel incentivized to contribute to broader organizational success
Job Analysis & Its Components
▪ It is a systematic process of identifying and determining the duties,
responsibilities, and requirements of a job.
▪ It provides way for organizations to fully understand nature of a job.
▪ It helps draft better job descriptions and develop effective training
and development programs.
Components:
Job Description (What is expected?) Job Specifications
Tasks Qualifications
Duties Skills
Responsibilities Knowledge
Working Conditions Abilities
Steps Involved in Job Analysis
▪ Several key steps must be followed to gather and analyze data about a
job during this process. Every step plays an important role in
providing accurate as well as comprehensive information regarding
various aspects of the work being evaluated. The normal stages
involved include:
▪ Data Collection: Using different techniques like interviews,
questionnaires, and observations among others to gather facts about
jobs.
▪ Job Description: This is where a detailed description of duties and
responsibilities is prepared based on gathered data.
Steps Involved in Job Analysis
▪ Job Specifications: Defining necessary skills, knowledge, or abilities
required to perform given tasks satisfactorily.
▪ Verification: Review descriptions/specifications with employees’
supervisors to confirm their validity and accuracy.
▪ Documentation: Keeping records for future reference purposes after
documenting findings from such investigations.
▪ Implementation: Applying analysis findings to human resource
functions e.g., recruitment, training & development performance
appraisal, etc.
Job Enlargement and Job Enrichment
▪ Job enrichment and job enlargement are both methods for increasing
employee satisfaction, motivation, and engagement. However, there is a
distinct difference between the two concepts.
▪ Job enlargement is increasing the number of tasks an employee handles in
an existing role without changing the level of responsibility.
Example 1:
At a car assembly plant, an assembly-line worker who originally only installed
car doors is now also asked to attach side mirrors and interior trim. These
new duties are at the same skill level as the original task (horizontal
expansion), so the worker’s role simply gains more tasks of the same type.
The job has been enlarged by adding duties, but the worker still has no extra
authority or decision-making power.
Job Enlargement
Example 2:
In an office, an administrative assistant
who scheduled meetings is now also
responsible for filing paperwork and
answering phone calls. These added
duties are similar clerical tasks
(horizontal expansion), so her role has
more variety of tasks but remains at
the same level. The assistant’s
workload increases with these extra
tasks, but she still reports to a
manager and has no new decision-
making power.
Benefits of Job Enlargement
Benefit Description
Reduces Varied activities decrease monotony and make a job more
Monotony interesting.
Promote Skill Workers develop a wider set of skills (although still at the same
Development complexity level) and have chance to explore new interests.
Boosts Motivation More task variety can make the workday feel more interesting
and rewarding.
Enhances Employees can perform multiple tasks, making workforce
Flexibility scheduling and task rotation easier for management.
Improving Additional tasks make workers more proficient, flexible and
efficiency and inventive and can adapt as needs change.
productivity
Disadvantages of Job Enlargement
Loss Description
Employees might feel overburdened with more tasks without
Workload Increase
extra pay or authority.
No Real Since the job stays at the same responsibility level, it might
Advancement not satisfy employees seeking career growth.
Management might need to spend time and money training
Training Costs
employees for new tasks.
Some employees may resist taking on more work without any
Potential Resistance
promotion or clear reward.
Job Enrichment
▪ In Job Enrichment, jobs are redesigned to include more responsibilities,
challenges, and opportunities for growth. It’s about giving employees control over
their work and allowing them take on tasks that require higher skill levels.
▪ The job holder is given responsibilities and power to plan, control and make
important decisions.
▪ The requirement of supervision will now be less, or it can also be said that the
worker himself will perform the tasks of a supervisor.
Example 1:
In a factory, a machine operator who used to just run the machine is now given
responsibility for planning production schedules and performing quality checks. This
adds higher-level responsibility (vertical expansion): the operator can adjust
schedules and ensure product standards. His role is enriched because he moves
beyond routine tasks – now he makes decisions and has more autonomy and
significance in the job.
Job Enrichment
Example 2:
In a retail store, a cashier who normally just
checks out customers is now given authority
to handle returns and reorder inventory. This
added responsibility (vertical expansion)
means the cashier makes decisions about
stock instead of only scanning items. The job
is enriched by this change because it adds
decision-making and autonomy, making the
cashier’s work more meaningful and varied.
Benefits of Job Enrichment
Benefit Description
Increased Job The role involves substantial responsibilities, challenges and autonomy,
Satisfaction contributing to increased employee satisfaction.
Exposure to complex tasks and decision-making opportunities helps
Skill Development and
employees acquire new skills, fostering career advancement and adaptability.
Professional Growth
Higher Employee Empowered employees are more committed, leading to proactive
Engagement contributions and alignment with organizational goals.
Enhanced satisfaction and growth opportunities reduce the likelihood of
Reduced Turnover employees seeking external opportunities.
Autonomy encourages employees to experiment with new ideas, driving
Innovation and Creativity process improvements and innovative solutions.
Disadvantages of Job Enrichment
Loss Description
Additional responsibilities without adequate support or training
Stress and
can overwhelm employees, leading to burnout or decreased
Overload
morale.
Resistance to Some employees may prefer routine tasks and resist taking on
Change new challenges.
Increased Organizations may incur expenses in upskilling employees to
Training Costs handle enriched roles effectively.
