Organizational Structure

Dr. Mandi came up with another topic "Organizational Structure"

I have seen companies spending extravagant amount of time and money changing their organization structure. Infosys Ltd redesigned its organization structure realigning its services around four verticals - BFSI, ECS, Retail and Manufacturing. It makes complete sense since the company wants to present a uniform and consistent deal to its clients and avoid the problems of multiple deals across different offerings. But this was the same company which was split across Geographies in the late 90's. By 2003, the geographies were merged and company was realigned based on respective delivery units. Gradually the whole company was re jigged across six different verticals. Come 2007 and five horizontal units were embedded within these verticals. Finally just a year back, it was realigned on the lines of four verticals with most of the horizontal business units being merged to respective verticals. So coming back to the question. Why does companies spend so much of their money and time on re-jigging their organization structure?

One word answer - because it is that important to the success of the firm. While the strategic decisions are taken by the top line management, it is the effectiveness of the organization structure which translates this strategy into successful implementation.

An organizational structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims. It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment. 

What are the 4 basic elements of Organization Structure ?

a) Span of Control: Number of people directly reporting to the next level in the hierarchy.

b) Centralization: Degree to which formal decision authority is held be a small group of people, typically those at the top of the organizational hierarchy.

c) Formalization: Degree to which organizations standardize behavior through rules, procedures, formal training, and related mechanisms.

d) Departmentalization: Organizational charts that specifies how employees and their activities are grouped together.

How does the Organizational Structure affect the organization ?

Organizational structure affects organizational action in two big ways. 

a) Provides the foundation on which standard operating procedures and routines rest. 

b) Determines which individuals get to participate in which decision-making processes, and thus to what extent their views shape the organization’s actions.

TYPES OF ORGANIZATIONAL STRUCTURES

a) Functional Organization

This type of organizational structure:

•  - Brings together in one department everyone engaged in one activity or several related activities that are called FUNCTIONS. 
•   - This leads to operational efficiencies within that group. However it could also lead to a lack of communication between the functional groups within an organization, making the organization slow and inflexible.
•  - Mainly used by the smaller firms that offer a limited line of products.
•  - Makes supervision easier as each manager must be expert in only a narrow range of skills. It also helps to group a particular set of people with the specialized kind of skill set.
•  Disadvantages :
•    i) As each department functional managers need to report to central headquarters (President), it can be difficult to make quick decisions.
•    ii) Harder to judge performance because which department to blame when a new product fails.
•    iii) Difficult to coordinate the functions of members of the entire organization as each department may have difficulty working with other departments in a unified way to achieve organizational goals.

b) Product/Market/Divisional Organization

  - Brings together in one work unit all those involved in the production and marketing of a product or a related group of products, all those in a certain geographic area, or all those dealing with a certain type of customer.

  - Can follow three patterns as described above:

    i) DIVISION BY PRODUCT

ii) DIVISION BY GEOGRAPHY

iii) DIVISION BY CUSTOMER 

c) Matrix Organization:

One example of Matrix Organization in real life example is the Organization structure of Accenture. 

This organizational method is more common in the consulting world and has the following characteristics:

• Each worker is assigned to two bosses in two different hierarchies. The first hierarchy is the executive aspect and is there to get projects completed using the resources that the company has.
• The second kind of hierarchy in the matrix structure is the functional aspect and its purpose is to train employees in industry specific knowledge. At Accenture this functional aspect is also a matrix and is made up of five industry-based operating groups and three capability groups.

Goodbye till the next blog..................

Organizational Culture

It was one Class when I entered Late and I saw Dr. Mandi performing his daily rituals of opening his shoes.
He introduced another commonly heard topic Organizational Culture.

What is Organizational Culture??

Organisational culture is a system of shared values and beliefs about what’s important and appropriate in an organisation; it also includes feelings and relationships internally and externally. Every organisation’s values are supposed to be unique and are widely shared and reflected in daily practice, relevant to the company purpose and strategy. It’s important for organisations of different size and level to create the kind of environment or culture where the positive managerial patterns of listening, coaching, guiding, involving and problem-solving are actively encouraged and reinforced. This is where the policy of the Human Resources department is critical as it reflects and reinforces organisational values and culture.

Changing organisational culture

Focusing on building and sustaining an organisational culture is a way of showing that people are the organisation’s most valuable asset. But sometimes a change is required for better efficiency and productivity.

Companies which have embraced organisational culture change see a positive increase in their employee engagement, attraction of new customers and boosting their revenues. Other aspects influenced by effective culture change include:

• Greater employee retention
• Customer satisfaction
• Reduction in operating costs, etc.

Over the last decade the interest in organisational culture has grown quickly. Changing a culture is a large-scale undertaking because every organization’s culture comprises an interlocking set of goals, roles, processes, values, communication practices, attitudes and assumptions; these are the organisational tools needed to be put into play for great results.

Employee engagement is central to what the organizational culture is...

The fact that employee engagement can draw a line between staff morale and quality of output should see it being central to many companies’ future plans. A business is only as good as it its output and if it produces too few goods or a poor quality service, it can have a draining effect on the business. Quite often there is nothing more than can be done from an automated point of view with respect to improving output, which means that issues could lie with the workforce. This is where businesses need to develop a good relationship with their employees to find out if there is anything that can be done to improve the working environment.

Some of the Employee Engagement Awards or Practices which must be introduced in every industry are :-

• Best Kaizen Award
• Star Performer of the Month in every Department
• Instant Recognition Award in the Form of Mail by Boss
• Specialized Program for Accelerated Career
• Sales Achievement Linked Award

See You in the next Blog..... Happy Blogging!!!