ORGANISATION STRUCTURE

ORGANISATION BEHAVIOR - II Group 9 Section D

Presented By: Abhinav Ramji Mishra Divyansh Aggarwal Nalla Srinath Reddy Sahil Gupta Simran Preet Kaur Sumit Kumar 11DM-005 11IB-020 11DM-083 11IB-069 11FN-105 11DM-164

Organisation Structure

INDEX
Executive Summary ............................................................ 2 Introduction ......................................................................... 3
Levels Of Management ................................................................. 3 Traditional Structure Of An Organisation ................................... 4

Organisation Design ............................................................ 5

Functional Structure ..................................................................... 5 Divisional Structure ...................................................................... 6 Geographic Structure .................................................................... 6 Matrix Structure ........................................................................... 7 Horizontal Structure ..................................................................... 8 Hybrid Structure ......................................................................... 10 Virtual Structure ......................................................................... 10

Objective ............................................................................. 11 Methodology ....................................................................... 11 Survey Results ................................................................... 12 Research and Analysis ...................................................... 17 References. ......................................................................... 20

Organisation Structure

EXECUTIVE SUMMARY
With the help of inputs from various sources, we analyzed the organisational structures at different organisations and how they work. A prominent part of our analysis dealt with understanding the effectiveness of structures in an organisation and in what way do those organisational structures help the organisations in improving the productivity of their employees. We were able to determine the following from the survey: Which structure is commonly adapted by a particular industry? Which is the most employee-friendly structure? Which is the most preferred structure amongst all? Where are the pitfalls? What are the advantages of a particular structure? What are the disadvantages of a particular structure?

Organisation Structure

INTRODUCTION
An organisation can be looked at in several ways. We can think of it as a system that takes capital and labour as input and gives services or products as output. Another way of looking at an organisation is to see it as a social structure in which rules and procedures govern the way that the people working in the organisation interact. Any organisation must have some structure and in general this will be hierarchical.

LEVELS OF MANAGEMENT
At each level of the organisation, employees have different responsibilities and roles. At the bottom is the operational staff that is responsible for producing the goods or delivering the services. There is some degree of management at this level such as foreman or team leader. The next level consists of middle managers, who are responsible for ensuring that the operational tasks are carried out. Above the middle managers will be the senior managers who will be responsible for planning and decision making. At the very top of the hierarchy is the executive management which will be responsible for long term planning and setting the overall goals for the organisation. The hierarchy may be organized according to function - e.g. Personnel, Finance, and Marketing or, in a large organisation, it may be based on divisions where each division replicates the hierarchical structure of other divisions. The larger an organisation the more structured it is likely to be and the more clearly defined will be the roles of individuals within the structure.

Organisation Structure

TRADITIONAL STRUCTURE OF AN ORGANISATION

SENIOR Senior people like Chief Executives, MDs, Marketing Directors, etc. have to take strategic decisions. TACTICAL Middle management (e.g. Area Sales Director, Factory Manager) have to take tactical decisions. OPERATIONAL Operational people (e.g. Foreman, shift leaders, the workforce) have to take operational decisions.

Organisation Structure

ORGANISATION DESIGN
FUNCTIONAL STRUCTURE
Employees within the functional divisions of an organisation tend to perform a specialized set of tasks, for instance the engineering department would be staffed only with software engineers. This leads to operational efficiencies within that group. However it could also lead to a lack of communication between the functional groups within an organisation, making the organisation slow and inflexible. As a whole, a functional organisation is best suited as a producer of standardized goods and services at large volume and low cost. Coordination and specialization of tasks are centralized in a functional structure, which makes producing a limited amount of products or services efficient and predictable. Moreover, efficiencies can further be realized as functional organisations integrate their activities vertically so that products are sold and distributed quickly and at low cost. For instance, a small business could make components used in production of its products instead of buying them. This benefits the organisation and employees faiths.

Organisation Structure

DIVISIONAL STRUCTURE
Also called a "product structure", the divisional structure groups each organisational function into a division. Each division within a divisional structure contains all the necessary resources and functions within it. Divisions can be categorized from different points of view. One might make distinctions on a geographical basis (a US division and an EU division, for example) or on product/service basis (different products for different customers: households or companies). In another example, an automobile company with a divisional structure might have one division for SUVs, another division for subcompact cars, and another division for sedans. Each division may have its own sales, engineering and marketing departments.

GEOGRAPHIC STRUCTURE
Geographic structure groups employees together based upon specific geographic location. It clearly defines reporting relationships, decisionmaking authority, and the physical location of employees from various departments. The representatives are grouped from each functional department into units formed to serve a specific market or region. This is often used by large companies that operate in many areas throughout the country or in both the home country and overseas. Geographical units can be

Organisation Structure highly effective if they are located within the regions they serve and employ workers from the local labor pool.

MATRIX STRUCTURE
The matrix structure groups employees by both function and product. This structure can combine the best of both separate structures. A matrix organisation frequently uses teams of employees to accomplish work, in order to take advantage of the strengths, as well as make up for the weaknesses, of functional and decentralized forms. An example would be a company that produces two products, "product a" and "product b". Using the matrix structure, this company would organize functions within the company as follows: "product a" sales department, "product a" customer service

Organisation Structure department, "product a" accounting, "product b" sales department, "product b" customer service department, "product b" accounting department. Matrix structure is amongst the purest of organisational structures, a simple lattice emulating order and regularity demonstrated in nature. Weak/Functional Matrix: A project manager with only limited authority is assigned to oversee the cross- functional aspects of the project. The functional managers maintain control over their resources and project areas. Balanced/Functional Matrix: A project manager is assigned to oversee the project. Power is shared equally between the project manager and the functional managers. It brings the best aspects of functional and projective organisations. However, this is the most difficult system to maintain as the sharing power is delicate proposition. Strong/Project Matrix: A project manager is primarily responsible for the project. Functional managers provide technical expertise and assign resources as needed.

HORIZONTAL STRUCTURE
It is an organisational structure with few or no levels of intervening management between staff and managers. The idea is that well-trained workers will be more productive when they are more directly involved in the decision making process, rather than closely supervised by many layers of management.

Organisation Structure This structure is generally possible only in smaller organisations or individual units within larger organisations. When they reach a critical size, organisations can retain a streamlined structure but cannot keep a completely flat manager-to-staff relationship without impacting productivity. Certain financial responsibilities may also require a more conventional structure. Some theorize that flat organisations become more traditionally hierarchical when they begin to be geared towards productivity.

This model promotes employee involvement through a decentralized decisionmaking process. By elevating the level of responsibility of baseline employees and eliminating layers of middle management, comments and feedback reach all personnel involved in decisions more quickly. Expected response to customer feedback becomes more rapid. Since the interaction between workers is more frequent, this organisational structure generally depends upon a much more personal relationship between workers and managers. Hence the structure can be more time-consuming to build than a traditional hierarchical model.

Organisation Structure

HYBRID STRUCTURE
A hybrid organisational structure is a one in which more than one organisational design is used. This allows a company more flexibility in distributing work and assigning job roles. It can be especially beneficial in small business, where there are fewer employees to manage daily operations. A hybrid organisational structure creates a shared mission and allows for employees to work on different projects and in different sectors. This structure creates a unified team of individuals with a common goal and different experience and interest levels. Each employee is able to perform work in the areas he is best suited to, moving from project to project and reporting to different individuals when necessary. Another benefit to the hybrid organisational structure is the massive scale that can be reached by its use.

VIRTUAL STRUCTURE
The virtual organisation exists within a network of alliances, using the Internet. This means while the core of the organisation can be small but still the company can operate globally.

10

Organisation Structure

OBJECTIVE
The main objective of the project was to validate that "An organisational structure affects employee retention in the organisation". The objectives that were considered in arriving at the solution are : To understand various organisational-structures Differentiate between various organisational-structures To study advantages and dis-advantages of different types of organisational structure

METHODOLOGY
To assess different kinds of Organisational Structures and their impacts on the working behavior of employees, a questionnaire had been floated to know about kind of Organisation (Manufacturing, IT/ITES, Telecom), kind of organisation structure like Functional, Divisional, etc. have been included along with satisfaction levels. Questionnaire is floated over Internet to reach maximum employees in diverse sectors.

11

Organisation Structure

SURVEY RESULTS
We performed a survey with a sample size of 102 people. These individuals have been working for at least 5 years. The sample was aware about their organisation structure. We observed that the majority of individuals were satisfied with the structure their organisation followed. There were 15 questions in all where the first 3 were for classification purposes, and the next 12 were related to the organisation structure and their preferences. Please find the results of our findings below:

12

Organisation Structure

13

Organisation Structure

14

Organisation Structure

15

Organisation Structure

16

Organisation Structure

RESEARCH AND ANALYSIS

We received 102 responses for the survey and we have analysed the following from it: Of the total sample, 27% respondents belonged to services sector, followed by 28% from the manufacturing sector. The respondents were also asked about the present structure of their organisation. Maximum respondents are working in functional structured organisation (29%) followed by matrix structured organisation (20%). After these preliminary questions, we asked questions to ascertain the satisfaction levels with their current organisations structure. A majority of respondents said that their organisations handled operations in a cooperative manner.65% respondents said that its easy for them to approach the top management in their organisation. Majority (61%) of the respondents said that their organisations valued their opinions. We asked them whether the organisations had any mission plans and if the organisation was good at fulfilling the mission. Most of the respondents in the Manufacturing, IT/ITES, Telecom and Services sectors mentioned that their organisations had a mission plans and were also good at fulfilling them. A few respondents in the others category, who were self-employed answered this question negatively. When enquired about the time taken for information to reach from the top management, maximum respondents said 1 -2 days. On the question whether the people liked starting a new day at work, the most number of negative responses were from the IT/ITES sector. Of all the sectors, the maximum numbers of respondents are working in the functional structured organisation and are satisfied with it.

17

Organisation Structure When asked for the most preferred structure they would like to work in, horizontal structured organisation scored the maximum score.

The above graph depicts the time to disseminate information for different types of structure based on our survey.

The above graph shows that most people prefer the structure that they currently work in over others.

18

Organisation Structure Thus, on the basis of the survey, we can say that the IT/ITES sector had the weakest culture in comparison to the other sectors included in the survey. We also searched the internet for the latest attrition rate across sectors. IT/ITES sector had attrition rates of around 25%, compared to the Indian average of 18% (across all sectors). This validates the fact that a good organisational culture facilitates employee retention in an organisation.

19

Organisation Structure

REFERENCES
Organisational Theory, Change, and Design [Richard L. Daft] Seventh Indian Reprint 2011 Welcome to Learn Management2.[ONLINE] Available from: http://www.learnmanagement2.com/ [Accessed: 26th Nov 2011] Factors Affecting Organisational Design. [ONLINE] Available from: http://www.cliffsnotes.com/study_guide/Factors-Affecting-OrganisationalDesign.topicArticleId-8944,articleId-8881.html [Accessed: 26th Nov 2011] Organisational Structure.. [ONLINE] Available from: http://www.hrmguide.net/hrm/chap4/ch4-links3.htm[Accessed: 26th Nov 2011] Organisational Structure. [ONLINE] Available from:http://www.encyclopedia.com/topic/Organisational_structure.aspx[Acces sed: 8th Dec 2011] Organisational Structure Types and Design Strategy. [ONLINE] Available from:http://www.organisationalstructure.net/[Accessed: 8th Dec 2011] Organisational structure. [ONLINE] Available from: http://en.wikipedia.org/wiki/Organisational_structure[Accessed: 10th Dec 2011]

20