Organisations Structures
and Systems
Ashutosh Murti
[email protected]
Figure 4.1 - Design Challenge
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Figure 4.1 - Design Challenge
(cont.)
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Figure 4.1: Design Challenge
(cont.)
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Figure 4.1 - Design Challenge
(cont.)
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Figure 4.1 - Design Challenge
(cont.)
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Figure 4.2 - Building Blocks of
Differentiation
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Figure 4.3 - Organizational
Chart of the B.A.R. and Grille
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Mechanistic Vs. Organic Structures
Mechanistic Organic
• High formalization • Low formalization
• Narrow span of control • Wide span of control
• High centralization • Low centralization
MECHANISTIC VERSUS ORGANIC DESIGNS:
A bird’s eye view
Structure
Dimension Mechanistic Organic
Stability Change unlikely Change likely
Specialization Many specialists Many generalists
Formal rules Rigid rules Considerable flexibility
Authority Centralized in Decentralized, diffused
few top people throughout the
organization
Elements of Organizational Structure
Department- Span of
alization Control
Organizational
Structure
Elements
Formalization Centralization
The Four Key Design Decisions
Specialization
Division of Labor:
High Low
Basis
Departmentalization:
Homogeneous Heterogeneous
Number
Span of Control:
Few Many
Delegation
Authority:
High Low
Factors Affecting Organizational Structure
Formal and Informal Organisations
• Both Formal and informal organizations co-exist in any
organizational structure. They basically define the path of
communication and mode of information sharing and are part
of a whole organization. They may share common or divergent
goals.
• The formal organization is the defined set-up of roles for the
achievement of organizational goals and objectives.
• Informal organizations are formed by employees, without any
formal goals or objectives.
Tall versus Flat Organizations: Comparison
Chief
Executive
Tall hierarchy
Relatively narrow
Chief span of control
Executive
Flat hierarchy
Relatively wide
span of control
Forces For (De)centralization
Centralization
• Organizational crises
• Management desire for control
• Increase consistency, reduce costs
• Complexity — size, diversity
• Desire for empowerment
Decentralization
Decentralization: Benefits
When Low And When High
Low Decentralization High decentralization
(High centralization) (low centralization)
Eliminates the additional respon- Can eliminate levels of management,
sibility not desired by people making a leaner organization
performing routine jobs
Permits crucial decisions to be Promotes greater opportunities for
made by individuals who have decisions to be made by people closest
the “big picture” to problems
Integrating Mechanisms
Simple 1.Hierarchy of authority specifies reporting relationships.
2.Direct contact requires managers from different functions to meet
to coordinate activities.
3.Liaison role requires a manager to coordinate with other subunit
managers.
4.Task forces create a temporary cross-functional committee.
5.Teams require different functional managers to coordinate
activities.
6.Integrating roles coordinate two or more functions or divisions.
Complex 7.Integrating departments coordinate functions or divisions.
4 Organizational Design Challenges That
Most Leaders Misdiagnose
• Symptom: Competing priorities
Common Design Challenge: Poor governance
• Symptom: Unwanted turnover
Common Design Challenge: Bad role design
• Symptom: Inaccessible bosses
Common Design Challenge: Excessive spans of control
• Symptom: Cross-functional rivalry
Common design challenge: Misaligned incentives or metrics
