Organizational Design Lecture
At the end of this lecture you should:
• Understand the principles of organizational design
• Understand the organization structure
• Effective organizational design
• Organizational change steps
Principles of Organizational Design
• Division of Labour
• Unity of Command
• Authority and Responsibility
• Spans of Control
• Contingency Factors
Division of Labour
Departmentalization
it is the basis in which jobs are grouped together
Specialization
Tasks in the organization are subdivided in to separated job, so
each job is accomplished by a different person
Unity of Command
Line of Command
An organization where each manager is responsible for doing what his
superior tells him to do.
One superior
One leader or head for each organization.
Authority & Responsibility
Line & staff authority:
- Line: managers who have the formal power to direct their staff.
- Staff: granted to staff specialists in their areas of expertise.
Authority and power
- Power is the ability of person to influence the believes of other group.
- Authority is the right given to a manager to achieve the objectives.
Spans of Control
Levels of Control
Centralization and Decentralization
- Centralization: decision-making authority is at the upper level
- Decentralization: decision-making authority pushed downward to lower level
Contingency Factors
Environment and Technology
Knowledge Technology
Technology that adds a layer of intelligence to information technology,
to filter appropriate information and deliver
Organizational Structures
General manager
Sales and
Marketing Production Finance Human Resources
It is effective with small organizations.
Functional Structure: All related and similar work is placed in
one department
Product structure Geographical structure Divisions created according
to the types of products or services
Divisions based on the location .
Divisional Structure: divisions based on locations or products.
It is effective with large organizations.
Geographically dispersed.
Wide range of goods and services.
Matrix structure: it combines between functional and divisional structures.
It is effective with projects.
Type Advantages (+) Disadvantages (-)
Functional
Reduces duplication of activities Creates narrow perspectives Encourages Technical expertise Difficult to coordinateDivisional
Improves decision making Loses some economies of scale
Fixes accountability for performance
Hard to allocate corporate staff support
Increases coordination of functions
Fosters competition among divisions
Matrix
Reinforces technical excellence Increases power conflict Efficient use of resources Increases stress and confusion
Lateral Relations:
• Dotted-line supervision
• Communication roles
• Temporary task forces
• Permanent teams
• Integrating managers
Organizational Change
Unfreezing
Movement
Refreezing