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P&O Lect 2 Additional Note

Organizations are formed so that people can accomplish more together than alone. An organization's structure determines how jobs are grouped and coordinated. There are several ways to structure departments, including by function, product, geography, or customer. Matrix departmentalization combines functional and project-based authority, allowing managers to control projects while maintaining staff morale. An organization chart visually depicts relationships and responsibilities within an organization but may become outdated. Maintaining a clear chain of command is important, but long chains can create communication problems.

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42 views

P&O Lect 2 Additional Note

Organizations are formed so that people can accomplish more together than alone. An organization's structure determines how jobs are grouped and coordinated. There are several ways to structure departments, including by function, product, geography, or customer. Matrix departmentalization combines functional and project-based authority, allowing managers to control projects while maintaining staff morale. An organization chart visually depicts relationships and responsibilities within an organization but may become outdated. Maintaining a clear chain of command is important, but long chains can create communication problems.

Uploaded by

Chia Kong Haw
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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ABDM4044 PEOPLE & ORGANISATION May 24, 2010

Lecture 2: Organization Design, Effectiveness and Innovation.


Organizational Structure:
v An organization structure is:
Ø A collection of people
Ø Working together
Ø For some common objective.
Why do people form organization?
v Enable people to accomplish things individuals alone would find it difficult/ impossible to
achieve. Help overcome our limitation ad individuals.
v Provide continuity of knowledge.
Ø Store and protect the knowledge civilization has gathered and recorded.
Ø Provide a foundation of knowledge on which we can build on and acquire and
achieve greater results.
v As a sources of career.
Ø Provide their employee with a source of livelihood and perhaps even personal
satisfaction and self-fulfillment.
v Gains in productivity, because they make possible specialization and exchange.
v Synergy occurs.
Before organizing an office, must know the purpose of a particular office only the task are being
performed its product.
Organization Chart:
v Business divided into areas where employees have responsibilities.
v State relationship between staffs. E.g. Superior, Subordinates, Peers.
v Number of people working in the organization.
v Name of staff and position of each staff.
v Historical record – organization change make the chart become outdated.
v As information.
Advantage:
v It’s a tool that can effectively delineate work responsibilities and reporting relationships.
v Can be particularly useful as a navigational tool when small businesses expand their
operations.
Disadvantage:
v Change very fast – become outdates – time & effort.
v Rigid outlook by staffs – placed in boxes - too conscious about boundaries can damage
work attitude. E.g. “it’s not my job”
v Sometime doesn’t show the exact relations between staffs (Do not show the informal
communication line.) – No job descriptions.
Organization Structure Term:
v Responsibility – Area of work for a person/ group is accountable for. E.g. Discipline of
staff | sales of products.
v Duties – Works/ job requirement arising from responsibility. E.g. write warring letter if
discipline not followed.
Departmentalization
v How jobs/ tasks are decided, group and coordinated.
v All departments must understand and pull together toward achieving the organization
goals.
v All organization activities are determined; those jobs which are in same field are joined
together.
v Activities are grouped by functions. E.g. Finance, Marketing.
v Name of departments depend on the type of business the organization is in.

Ø Departmentalization by Function:
Advantage:
• Simple
• Work is done by specialists who can understand better.
• Simplifies training and recruitment.
Disadvantage:
• Coordination becomes difficult when organization grows and has product
diversity.
• Difficult to judge performance and accountability.
• Result in specializes people → self-centered.

Ø Departmentalization by Product:
§ A product unit is set up for each goods & services.
§ Multiproduct companies use this structure. E.g. General Moto → truck
division; sport car division; mini car division.
Advantage:
• Improve coordination of functional activities.
• Attention on product line.
• Responsibility for products at division level.
• Growth of products and services.
Disadvantage:
• Duplication of work
• More people to conduct work.
• Difficult to control by top management →authority is decentralized.
• Problem of coordination → become self-contained.

Ø Geography Departmentalization
§ Activities are divided into areas/ location.
§ For large companies which business is spread geographically.
Advantage:
• Convenience to customer.
• Good training for manager.
Disadvantage:
• Top manager lose control.
• Coordination problems.
• Duplication of effort.

Ø Customer departmentalization
§ Group activities according to customers. E.g. Bank; Insurance.
Advantage:
• Wide variety of need is defined.
• Focuses on customer needs.
• Products and services tailored to specific customers.
Disadvantage:
• Duplication of resources
• Difficult to achieve coordination across departments
• Decisions that please the company but may hurt the company.

Ø Matrix Departmentalization
§ Combines the advantage of purpose and process of functions.
§ Functional departments assign duration of products/ projects. Project manager
defines what to do and divide work. Member of a project team accept authority.
Advantage:
• More control over project.
• Higher staff morale.
• Better customer relations.
Disadvantage:
• Internal operational more complexes.
• Conflict of 2 superiors.
• Neglect of work – functional / project.
• More difficult to manage.
*Must have a very good communication line in order to have a Matrix!

Chain of command
v Unbroken line of authority from the top to the bottom of the organization.
v Everyone is accountable to someone.
v Problem arise when the chain of command is too long:
Ø Complexity in communication and coordination.
Ø Message gets distorted.
Ø Depersonalized employee relations (employee think they are not a part from the
organization).
Ø Too much “red tape” (centralization/ bureaucracy).

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