Organisational Design

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Organisational Design:

Organisational Design Organizational design is concerned with making decision about the forms of coordination control and motivation that best fit the enterprise. In making these decisions, it is necessary to consider external factors like market and internal factors like need's and aspirations of the members of enterprise. Organizational design is intimately concerned with the way in which the decision making is centralized, shared or delegated and with way the enterprise is governed. “ Organization design is a process that involves decisions about six key elements, work specialization, departmentalization, chain of command, span of control, centralization, decentralization and formalization”.


DIMENSIONS OF ORGANISATIONAL DESIGN The dimensions describe organizations much the same way that personality and physical trait describe the people. Organizational Dimensions : Structural : Provide labels to describe internal characteristics of an organ and create basis for measuring and comparing organisations . Contexual : It characterise the whole organ including it size, technology, environment and goals, and describe organizational setting that influences and shapes the structural dimensions.

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Contextual dimensions are confusing because they represent both the organ and environment. Contextual dimensions can be envisioned as a set of over lapping element that underlie an organ structure and work processes. The structural and contextual dimensions interact with each other and can be adjusted to accomplish the very purpose of the creation of organisation .

Goals and Strategy :

Goals and Strategy Size Environment Culture Technology Formalization Specialization Hierarchy of authority Centralization Professionalism Personnel r atios Interacting contextual and structural dimensions of organizational design

Interacting Contexual and structural Dimensions of organisational Design:

Structural Dimensions: 1. Formalisaton : It pertains to the amount of written documentation in the oraganisation . Documentation includes: -Procedures -Job- descriptions -Regulations -Policy Manuals Interacting Contexual and structural Dimensions of organisational Design These documents describe the behavior and activities of the organisation .

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The formalisation is often measured by simply counting the number of pages of documentation within the organisation large universities have high degree of formalisation whereas family managed business is lowest formalised . 2. Specialisation : If is the degree to which organisational tasks are sub-divided into separate jobs. If specialisation is extensive, each employee performs only a narrow range of task.

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3. Hierarchy of authority: It describes who reports to whom and span of control for teach manager. It is depicted by an organisation chart. 4. Centralisation : It refers to hierarchical level that has authority to make a decisions. When decision-making is kept at the top level, the organisation is centralised other wise decentralised . 5. Professionalism : The level of formal education and training of employee is professionalism. Professionalism is considered high when employees require long periods of training to hold job in the organization.

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6. Personnel Ratio: Personnel ratio is measured by dividing the number of employees in a classification by the total number of organizational employees. This may be Administrative Ratio, Clerical Ratio, Professional staff Ratio and Ratio of direct and indirect labour . Total No. Clerks= 10 Total No. employees= 200 1:20= Clerical Ratio

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B. CONTEXUAL DIMENSIONS 1. Size: it is the organization's magnitude as reflected in the number of people in the organization. It indicates human part of social system. 2. Organizational Technology: It refers to the techniques, and action used to transform inputs into outputs. It concerns itself how the organisation actually produces the products and services it provides for customers and it includes such thing as flexible manufacturing, advanced information systems, and the internet. 3. The environment: It includes all elements outside the boundary of the organizations. Key elements include Industry, government, customers, suppliers and the financial community.


4. Organizational goals and strategy: This is to define the purpose and competitive techniques, that set it apart from other organization. Goals are often written down as an statement of company intent. A strategy is the plan of action that describes resource allocation and activities for dealing with the environment and reaching organizational goals and strategies define the scope of operations and the relationship with employees, customers and competitors.

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5. The organization’s culture is the underlying set of key values, beliefs, understandings and norms shared by employees. These underlying values may pertain to ethical behavior, commitment to employees, efficiency or customer services and they provide glue to hold organizaion members together. An organization culture is unwritten but can be observed in its stories, slogans, ceremonies, dress and office layout.


DETERMINANTS OF ORGANIZATIONAL DESIGN The factors which affect the organization in its becoming fit in all conditions for the attainment of organizational goal are called determinants of organization design. These factors may be identified as: A. Strategy and Goals B. Environment C. Technology D. Size/life cycle e. Culture.

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Strategy and Goals: For the accomplishment of organizational goals and missions, managers have to select specific strategy and design option that will help organization achieve its purpose and goals within its competitive environment. A strategy is a plan for interacting with competitive environment to achieve organizational goals. Strategy goals are defined where the organisation wants to go. Strategy defines it will get that . Goal—15% Annual sales growth Strategy to achieve may be -Aggressive adv. or -Motivating sale people -Acquiring other business that produces same product. Etc -etc any numbers

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Environment: Everything which surrounds and affect the organization in which it operates is the environment of the organization like, consumers, trade unions, technological breakthroughs, Govt. regulations, international happenings, climatic conditions, political ups and downs. Technology: It refers to the tools techniques and actions used to transform environmental inputs into organizational output. The strategy cannot be translated directly into output. We have to design different technologies for different production process (batch or mass) systems, differ control, system have to be created to maintain efficiency and efficacy . Therefore, technology will became a determinant for what type of structure is to be designed.

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Size and life cycle: Generally size of an organization is related to the age of organ. But it is not always true as lifecycle theories feel it. An organization may remain small although it may grow in age. It has been found that organization’s are more structurally differentiated with increase in size. Smaller organization tend to centralise themselves as compared to large organs. Age of the organizatiion makes it mature.

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Culture and People: Organization’s culture is the underlying set of key values, beliefs, understandings and norms shared by employees. These underlying values may pertain to ethical behaviour , commitment to employees, efficiency, or customer service and they provide glue to hold the organization together. Organization culture is unwritten but can be obsrved from the stories, slogans, ceremonies, dress and office layout. If the top manager is autocratic by nature, he/she would prefer an organization arrangement which would allow him or he to have closer control over people and operations. Organizational culture may or may not allow him to play autocratic role. The studies of troubled organization revealed that the strategy, organizational structure and culture will of ten reflect the personality and fantasies of top managers.

Components of organizational design:

Components of organizational design An effective organization structure would be one which can successfully cope up with the demand and constraints which the organization faces. A manager must be aware of the building blocks of an organizational structure. What constitute an organization structure is called the components of organizational design. Identification of the factors which would be relevant to organizational design is some what complicated because many of these components lack empirical support.

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Dalton (1980) reviewed 100 research paper and came to conclusion ambiguity, in consistency and paucity of knowledge are the problems in the way of understanding the components of organal design. But the whole literature gives rise to three main components. Complexity: The degree of differentiation that exists within an organisation 2. Formalisation : The degree to which jobs in an organasation are standardized . 3. Centralisation : The degree which the formal authority for making discretionary choices is concentrate is an individual, unit or level those permitting employees minimum in put in there work Organizational Horizontal complexity: the degree of differences in nature of jobs in an organisation Components Complexity Formalization Centralisation Vertical: the member of hierarchical levels Spatial: The degree of geographical separation among work units Professional

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