Describes olden and current forms of organizational structure

1. CHANGING ORGANIZATIONAL
STRUCTURE
VISHNU GOPAKUMAR

2. What is organizational structure?
• The levels of management and division of
responsibilities within an organization
• Break down of the managers and the different
departments within an organization
• It shows who manages who and how the
organization is split up to perform different tasks

3. What is organizational structure?
• As a business expands it means that the
business will more than likely take on more
staff.
• With the addition of new staff more
managers may be needed or managers will
be responsible for new staff.
• This will change the structure

4. BUILDING BLOCKS OF STRUCTURE
• Which elements of a company’s structure
make difference in how we behave and
how work is coordinated?
• Four aspects
– Centralization
– Formalization
– Hierarchical levels
– Departmentalization

5. CENTRALIZATION
• Degree to which decision-making authority is
concentrated at higher levels in an organization
• Many important decisions are made at higher levels
of the hierarchy, whereas in decentralized
companies, decisions are made and problems are
solved at lower levels by employees who are closer to
the problem in question. E.g. CATERPILLAR
• Decentralized companies give more authority to
lower-level employees, resulting in a sense of
empowerment

6. CENTRALIZATION
• Some employees are more comfortable in an
organization where their manager confidently gives
instructions and makes decisions.
• Centralization may also lead to more efficient
operations, particularly if the company is operating
in a stable environment
• Organizations can suffer from extreme
decentralization, E.g. FBI

8. FORMALIZATION
• Extent to which an organization’s policies, procedures, job
descriptions, and rules are written and explicitly articulated
• Control employee behavior using written rules, so that
employees have little autonomy to decide on a case-by-case
basis
• It makes employee behavior more predictable
• Whenever a problem at work arises, employees know to turn to
a handbook or a procedure guideline. Therefore, respond to
problems in a similar way across the organization; this leads to
consistency of behavior

9. FORMALIZATION
• A high degree of formalization may actually lead to
reduced innovativeness
• Reduced motivation and job satisfaction as well as a
slower pace of decision making
• The service industry is particularly susceptible to
problems associated with high levels of
formalization

10. HIERARCHICAL LEVELS
• Number of levels it has in its hierarchy
– Tall structure
• Many managers to report to
• Mainly in well est. org - Greater job security
– Flat structure
• Less managers to report to
• Greater need satisfaction
• Limited advancement opportunities

12. DEPARTMENTALIZATION
• Functional
– Based on similarity in functions (Mktg, fin, HR, etc)
– Each person serves a specialized role and handles large
volumes of transactions
• Divisional
– Departments represent the unique products, services,
customers, or geographic locations the company is serving
– Each unique product or service the company is producing
will have its own department
– employees act like generalists as opposed to specialists

13. Functional
Divisional

14. Rates & Ratios (As on 28/3/2014)
Ratios Rates
Cash Reserve Ratio 4.00
Statutory Liquidity Ratio 23.00
Cash-Deposit Ratio 4.78
Reverse Repo Rate 6.50
Bank Rate 8.50
Savings Deposit Rate 4.00
Marginal Standing Facility (MSF) Rate 8.50

15. Exchange rates
Country Exchange rate
Australian Dollar 55.433
Brazilian real 26.5
British Pound 99.87
Chinese Yuan 9.67
Euro 82.65
Singapore Dollar 47.60
Swiss Franc 67.81
US dollar 59.96
South African rand 5.67
Saudi Riyal 15.99

16. CONTEMPORY FORMS OF ORG STRUCTURE
• Matrix organizations
– Created in response to uncertainty and dynamism of the
environment and the need to give particular attention to
specific products or projects
– Have a design that combines a traditional functional
structure with a product structure
– Balance the benefits of product-based and traditional
functional structures

17. • Matrix organizations
– Employees reporting to department managers are also
pooled together to form project or product teams
– Product managers have control and say over product-
related matters, while department managers have
authority over matters related to company policy
– Increase communication and cooperation among
departments because project managers will need to
coordinate their actions with those of department
managers

19. • Boundaryless organizations
– Eliminates traditional barriers between departments as well
as barriers between the organization and the external
environment
– Modular Organization
• nonessential functions are outsourced
• retain only the value-generating and strategic functions in-house
– Strategic alliances
• similar to a joint venture, two or more companies find an area of
collaboration and combine their efforts to create a partnership that is
beneficial for both parties

20. • Learning organizations
– Actively seeks to acquire knowledge and change behavior as
a result of the newly acquired knowledge.
– Experimenting, learning new things, and reflecting on new
knowledge are the norms
– Are also good at learning from experience—their own or a
competitor’s
– At IBM, learning is encouraged by taking highly successful
business managers and putting them in charge of emerging
business opportunities (EBOs)

21. ORGANIZATIONAL CHANGE

22. WHY DO ORGANIZATIONS CHANGE?
• Movement of an organization from one state of
affairs to another.
• A change in the environment often requires change
within the organization operating within that
environment
• Change involves letting go of the old ways in which
work is done and adjusting to new ways.
• Therefore, fundamentally, it is a process that involves
effective people management

23. – Organizational change is often a response to changes to the
environment
– Organizations may realize that as the workforce gets older,
the types of benefits workers prefer may change
– Flexible work hours and job sharing to facilitate retiring
employees
– Dealing with age-related stereotypes which act as barriers in
the retention of these employees
Workplace Demographics

24. – Rapid developments in technology
– Moore’s Law – complexity double every 18 months with no
increase in costs
– Sometimes technology produces such profound developments
that companies struggle to adapt, E.g. CD’s
Technology

25. • Differences in national economies and standards of
living from one country to another
• Organizations in developed countries are finding that
it is often cheaper to produce goods and deliver
services in less developed countries
• Out source & Offshore
Globalization

26. • E.g. World Trade Center attack
• Simultaneous widespread of internet booking
encouraged them to compete primarily based on cost
• Cut back on amenities
• Whether the organization changes or not in response
to environmental challenges and threats depends on
the decision makers’ reactions to what is happening
in the environment
Changes in Market Conditions

27. • GROWTH & POOR PERFORMANCE

28. • Essential for a company to remain competitive.
• Failure to change may influence the ability of a
company to survive.
• Resistance to change is one of the top reasons
change efforts fail.
RESISTANCE TO CHANGE

29. • Active resistance - sabotage the change effort and be
outspoken objectors to the new procedures
• Passive resistance - involves being disturbed by
changes without necessarily voicing these opinions
• Compliance - involves going along with proposed
changes with little enthusiasm
• Enthusiastic support - defenders of the new way and
actually encourage others around them to give
support to the change effort as well
Reactions To Change

30. • Disrupted habits
• Personality
• Feeling of uncertainty
• Fear of failure
• Personal impact of Change
• Percieved loss of power
Reasons to Resist

31. • LEWIN’S 3 STAGE PROCESS
– Unfreeze
• Ensures employees are ready
– Change
• Execute
– Refreeze
• Ensures it becomes permanent
PLANNING & EXECUTING CHANGE

32. THANK YOU