Docstoc

Chap.17 Organizational structure _ design

Document Sample
Chap.17 Organizational structure _ design Powered By Docstoc
					TABANI’S SCHOOL OF ACCOUNTANCY

CHAPTER – 17 – “ORGANIZATIONAL STRUCTURE & DESIGN” (Study Text)

         ORGANIZATION:-

An organization is: „a social arrangements which pursues collective goals, which controls
its own performance & which has a boundary separately it from its environment.‟ E,g,
Multinational Co. Manufacturer, Accountancy Firm, Charity, Army, Etc.

         WHY DO ORGANIZATION EXISTS?

          (a)     Overcome people‟s individual limitations
          (b)     Specialization
          (c)     Save time
          (d)     Accumulate & share knowledge
          (e)     Enable people to pool their expertise
          (f)     Enable synergy ----> (2+2 =5)

         HOW ORGANIZATION DIFFER?

          -       Ownership (Public Vs Private)
          -       Control (By owner or people working on their behalf)
          -       Activity (Manufacturing, healthcare, services)
          -       Profit or non-profit it orientation
          -       Size (sole trader, partnership, company)
          -       Legal status (Ltd. Company, partnership)
          -       Sources of Finance (Borrowing, Govt. funding, share issued)
          -       Technology (High us low)

         Primary Goal:-                       most important goal (e.g. maximizing profit)

         Secondary Goal:-                     Subordinate goals which support primary
                                               goal (e.g. increasing sales)
         Organization structure
          “It is formed by the grouping of people into departments or sections and the
          allocation of responsibility & authority.”

OBJECTIVE OF ORGANIZATION STRUCTURE
Organization structure is the framework for:
-         allocating task
-         delegating authorities
-         coordinating activity &
-         channelling communication
Between individuals and groups in the organization.

    From the desk of Muhammad Ovais                                                      Page 1 of 9
TABANI’S SCHOOL OF ACCOUNTANCY

Components of organization: - (By Mihizberg)

1).   Structure Appex     Senior management            Ensure the org. follcuss its
                                                       mission.
2).   Operating Core      People directly involved in Securing inputs, a processing &
                          Production                   distributing them as output
3).   Middle line         Manager                      Organizing, planning & control
                                                       of work
4).   Techno structure    Specialist     advisors    & Offering technical support to
                          analysts                     the rest of the structure
5).   Support staff       Administrative             & Offering services, such as legal
                          concillicory support staff   advice, research etc.

Principles of organization:- Classical approach (By henry Foyal)

1.    Division of work
2.    Scalar chain                  Authority run from top to lattom
3.    Correspondence           of   A person with responsibility should be given authority
      authority & responsibility    to do it
4.    appropriate centralization    Decision should be taken at the top of organization
5.    Unity of command              For any action, a subordinate should receive action
                                    from one boss only
6.    Unity of direction            These should be one head & one plan for each activity.
7.    Initiative                    Employees should are discretion
8.    subordination              of The interest of employees should not prevail over
      individual interest           general interest of organization.
9.    Discipline
10.   Order
11.   Stability of personnel
12.   Equity
13.   remuneration
14.   ESIRIS De Corporation          Harmony & teamwork are essential to promote
                                     discipline & contentment.

Note: Ur work also suggested the similar set of organizing principles.

      MODERN APPROACHES TO ORGANIZATION:-

         (a)    Multi slciling                 Contrary to specialization
         (b)    Flexibility                    Smaller,    multi,     slcilled,   temporary
                                               structure, multifunctional units, etc.
         (c)    Empowerment                    Means to free employees from rigorous
                                               control by supervision


 From the desk of Muhammad Ovais                                                       Page 2 of 9
TABANI’S SCHOOL OF ACCOUNTANCY

CONTINGENCY THEORY:

(a)   Age                             Older organization, more formalized its behaviour
(b)   Size                            Larger organization, more formalized
(c)   Technology                      Larger organization, more formalized
(d)   Geographical dispersion
(e)   Personnel employed              Formalized structure needed for law-skilled work
                                      force
(f)   The type of activity the org.
      is involved in
(g)   The organizations objective

      SYSTEM APPROACH:-

       This approach views the organization as an open systems, which is connected to
       and interacts with its environment. It takes in inputs from its environment and,
       through various organization processes, converts them into output.

       As must revision sensitive to changes in its entered environment.

      TALL AND FLAT ORGANIZATION:

       -       Spam of control:

               “The spam of control refers to the non of subordinate, immediately
               reporting to a superior official”.

       -       A no. of factors influence the spam of control.

               (a)     A manager‟s capabilities limit the spam of control.

               (b)     The nature of the manager‟s workload.

               (c)     The geographical dispersions of subordinates: Dispersed terms
                       require more effort to supervise.

               (d)     Subordinates work.

               (e)     The nature of problem.

               (f)     The degree of interaction between subordinates.

               (g)     The amount of support that supervisors received from the part of
                       the organization or from technology.

 From the desk of Muhammad Ovais                                                      Page 3 of 9
TABANI’S SCHOOL OF ACCOUNTANCY


     TALL ORGANIZATION:-

      “A tall organization is one which, in relation to its size, has a large no. of levels of
      management hierarchy. This implies a narrow spam of control.”.

      FLAT ORGANIZATION

      „A flat organization is one, which in relation to its size, has a small no of
      hierarchical levels. This implies a wide spam of control.‟

      TALL ORGANIZATION
                        FOR                                       AGAINST
       - Narrow spam of control                    - Inhibits delegation
       - More participation of members in          - Rigid supervision
         devotions
       - Large no. of promotional ladders          - Some work passes through too many
                                                     hands
                                                   - Increase cost
                                                   - Slow decision making

      FLAT ORGANIZATION
                        FOR                                      AGAINST
       - Move delegation                           - Crises management due to overwork
       - Relating cheap                            - Sacrifices Control
       - Spread up communication


      DELEGATION:-
      “It is the reduction of no. of management Tevels from bottom to top.

      -       IT encourages delaying
      -       Empowerment
      -       Economy ---------------->     Delaying reduces managerial cost
      -       Fashion ------------------>   Flexible

     DEPARTMENTATIONS
      1.    GEOGRAPHICAL DEPARTMENTATION
                    Advantages              Disadvantages
       - Local decision making  - Duplication or possible loss of
                                  economics of scale.
       - Cheaper                - Inconsistency in methods




From the desk of Muhammad Ovais                                                           Page 4 of 9
TABANI’S SCHOOL OF ACCOUNTANCY

                            2.     FUNCTIONAL DEPARTMENTATION
          -          Functional organization grouping together, pensile who do similar tasks.

                          Advantages                               Disadvantages
              (a) Expertise is pooled                 (a) Focuses on internal processes
                                                          rather than the customer & outputs
              (b) Avoids duplication &         enable (b) ____________ of communication
                  economics of scale
              (c) Facilitates the recruitment       & (c) Poor coordination
                  development of specialists
              (d) It suits centralised business          (d) Creates vertical barriers to
                                                             information & work flow rather
                                                             than horizontal

        3.         CUSTOMER DEPARTMENTATION -> (e.g. jobbing or contacting firm)

DIVISIONALIZTION:-
„It in the division of a business into autonomous region or product businesses, each its
own revenue expenditure and capital asset purchase progress & therefore each with its
own profit & loss responsibility.”

In other words, divisiondisction is on organization within an organization.

Divisiondisction can be of 2 forms:
-         Subsidiary
-         Department

-         RULES OF DIVISIONDISCTION:-
1.        Each division must have complete authority
2.        Each unit must be large enough to work
3.        Unit must not very of head office for excessive management work
4.        Unit must have potential for growth
5.        Scope & challenge in the job of each unit.
6.        They should be arm‟s length transaction between the units.
                                          DIVISIONALISATION
                             Advantages                               Disadvantages
              1.   Management focuses on business        1. Independent products are difficult
                   performance                              to identify
              2.   Reduces the unprofitable products     2. It is only possible at a fairly senior
                   & activities being continued             management level
              3.   Encourages efficiency, lower, cost,   3. Resources problems may arise.
                   higher profit
              4.   Reduces the no. of management         4.
                   levels

    From the desk of Muhammad Ovais                                                           Page 5 of 9
TABANI’S SCHOOL OF ACCOUNTANCY

HYBRID STRUCTURE:-

“Hybrid (mined) structure may involve a mix of functional departmentation, ensuring
product organization, customer organization & tutorial organization.”

MATRIX STRUCTURE:-
“Matrix structure essentially „crosses‟ functional & product „ project organization, so that
staff in between functional or regional department are responsible:-

-         To their department managers, in regard to the activities of the department
-         To a product or project manager, in regard to the given product or project.

                          Advantages                                Disadvantages
           -   Greater flexibility of people, work      - Possible competition &        conflict
               flow & decision making & tasks &           between dual managers
               structure
           -   Support             inter-disciplinary   - Stress on staff caught    between
               cooperation & multi functional             conflicting divided
               working
           -   Encourage motivation & employed          - Increases cost
               development
           -   marker                                   - Slower decision making
           -   Horizontal work flow

NEW ORGANIZATION
(a)     Flat structure       More responsive & there is a direct relationship between the
                             organization‟s strategic centre & the operational units
                             sewing the customer.
(b) Horizontal structure Like matrix structure
(c) Chucked              & E.g. KFC, where they have permanent, contractual & daily
     „Unglued structure‟     wages employees
(d) Output         focused E.g. project
     structure
(e) Jobless structure        E.g. A person who is multi skilled can be employed by
                             many organization
   one place       many places
- centralization & decentralization
Centralized organization is one in which authority is concentrated in and place.
          -      Centralization can be seen in 2 ways
          -      Authority
-         Decentralization implies increased delegation, empowerment & autonomy at
          lower levels of the organization.

    From the desk of Muhammad Ovais                                                         Page 6 of 9
TABANI’S SCHOOL OF ACCOUNTANCY


                      Pro centralization                 Pro decentralization/delegation
           - Decisions are made at one point and - Avoid overburdening top manager
             are easier to coordinate
           - Wider view of problem & - Improves motivation of juniors
             consequences
           - Balance interest of I/f functions      - Greater awareness of local problem
                                                      by decision makers
           - Quality decisions                      - Greater speed of decision making
                                                      without need to refer back
           - Cheaper                                - Develop skills of junior
           - Ability to take cries decision quickly - Separate responsibilities can be
                                                      identified
           - Standardised policies, procedures & - Decisions are made locally
             documentation

By burns & stalker

Mechanistic Organization

Stable, efficient & suitable for slow-changing operating environments.

Organic Organization:-
Flexible, adoptive & suitable for fort changing dynamic operating environments.
Please see table 6.2, pg 333

-         Bureaucracy:- (By Weber)
          A bureaucracy is “a continuous organization of official functions bound by rules”.
-         Charteristics of bureaucracy
1.        Hierarchy of roles -------> Each lower office is under control of higher one.
          Specidisation
2.        High degree of specialization & training
3.        Professional nature of employment
4.        Impersonal nature of rules & procedure
5.        Rationality ------>   The hierarchy of authority & office structure is clearly
          defined.
6.        Uniformity in the performance of talk
7.        technical competence ----> All officials are technically components
8.        Stability -------> The Organization‟s structure, tasks & culture are consistent over
                             time, regardless of external change.

    From the desk of Muhammad Ovais                                                       Page 7 of 9
TABANI’S SCHOOL OF ACCOUNTANCY


                           Advantages                               Disadvantages
              - _____ for standardized, routine task   - Slow occasion making
              - Very effective                         - Uniformity inhibits the personal
                                                         development of staff
              - Regard adherence to procedure may      - It suppress innovation
                be necessary for fairness, safety &
                security (e,g, data protection)
              - Long lived organization & same         - Lack of feedback
                people like routine work.
                                                       - Slow changing organization
                                                       - Communication restricted


-         ADHOCRACY

          Adhocracy organic organization is “a type of organization design which
          temporary, adoptive, creative, to bureaucracy, which tends to be permanent, rule-
          driven & inflexible.”

-         Type of production system: (by Joan Woodward)

              (i) Unit Production – e.g. aircraft   No delegation & required a lot senior
                                                    control
              (ii) Mass Production                  e.g. Making cars
              (iii) Procen Production               Continuous Here the machine controls &
                                                    workers monitor them large span of control
                                                    e.g. cement plant

-         SOCIO – TECHNICAL SYSTEM:

          „A system which is technically strong but socially accepted.‟

          An organization may be seen as a socio – technical system with 2 major sub-
          systems:

          -         Technology, including task organization & methods

          -         People & their social arrangements

-         INFORMATION & COMMUNICATION TECHNOLOGY (ICT)




    From the desk of Muhammad Ovais                                                         Page 8 of 9
TABANI’S SCHOOL OF ACCOUNTANCY

          -       ICT has created the concept of virtual teams & virtual organization which
                  enables to share information, make joint decision & fulfill the
                  collaborative function of a team.

          -       ICT has also facilitated collaboration, stimulating team working,
                  teleconferencing, video conferencing, rietworked

          -       This has enabled organization to:

                  (a)     Outsource areas of organization activity to other organization

                  (b)     Centralized their departments to without the difficulties of
                          supervision, communication & control

                  (c)     Centralize their functions & services (E.g. data storage)

                  (d)     Adopt flexible working by making expertise available across the
                          organization.

-




    From the desk of Muhammad Ovais                                                        Page 9 of 9

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:420
posted:12/4/2009
language:English
pages:9