ORGANISATIONAL DESIGN IS A OVERALL SET OF STRUCTURAL ELEMENT

Organization design can be defined narrowly, as the process of reshaping organization structure and roles, or it can more effectively be defined as the alignment of structure, process, rewards, metrics and talent with the strategy of the business. Jay Galbraith and Amy Kates have made the case persuasively (building on years of work by Galbraith) that attention to all of these organizational elements is necessary to create new capabilities to compete in a given market. This systemic view, often referred to as the "star model" approach, is more likely to lead to better performance. Organization design may involve strategic decisions, but is properly viewed as a path to effective strategy execution. The design process nearly always entails making trade-offs of one set of structural benefits against another. Many companies fall into the trap of making repeated changes in organization structure, with little benefit to the business. This often occurs because changes in structure are relatively easy to execute while creating the impression that something substantial is happening. This often leads to cynicism and confusion within the organization. More powerful change happens when there are clear design objectives driven by a new business strategy or forces in the market that require a different approach to organizing resources. The organization design process is often defined in phases. Phase one is the definition of a business case, including a clear picture of strategy and design objectives. This step is typically followed by "strategic grouping" decisions, which will define the fundamental architecture of the organization essentially deciding which major roles will report at the top of the organization.

There is no one definite organizational structure and design that works for all businesses, but almost all types of
businesses have some degree of organizational structure and design that divides, groups, and coordinates job tasks in that business.

SIX KEY ELEMENTS OF ORGANISATIONAL DESIGN

2.

Departmentalization. It is the basis by which jobs are grouped together. For instance every organization has its own specific way of classifying and grouping work activities. There are five common forms of departmentalization: a. b. Functional Departmentalization. It groups jobs by functions performed. It can be used in all kinds of organizations; it depends on the goals each of them wants to achieve. . Product Departmentalization. It groups jobs by product line. Each manager is responsible of an area within the organization depending of his/her specialization. Geographical Departmentalization. It groups jobs on the basis of territory or geography. Process Departmentalization. It groups on the basis of product or customer flow. Customer Departmentalization. It groups jobs on the basis of common customers.

c. d. e.

3.

Chain of command. It is defined as a continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom. There are three important concepts attached to this theory: a. Authority: Refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it. Responsibility: The obligation to perform any assigned duties. Unity of command: The management principle that each person should report to only one manager.

b. c. 4.

Span of Control. It is important to a large degree because it determines the number of levels and managers an organization has. Also, determines the number of employees a manager can efficiently and effectively manage.

5.

Centralization and Decentralization. More Centralization More Decentralization

y y y y y y y

Environment is stable Lower-level managers are not as capable or experienced at making decisions as upper-level managers. Lower-level managers do not want to have say in decisions Decisions are significant. Organization is facing a crisis or the risk of company failure. Company is large. Effective implementation of company strategies depends on managers retaining say over what happens.

y y y y y y y

Environment is complex, uncertain. Lower-level managers are capable and experienced at making decisions. Lower-level managers want a voice in decisions. Decisions are relatively minor. Corporate culture is open to allowing managers to have a say in what happens. Company is geographically dispersed. Effective implementation of company strategies depends on managers having involvement and flexibility to make decisions

6.

Formalization. It refers to the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures.

REFERENCES

Drucker, P. F., "Management: Tasks, Responsibilities, Practices". New York: Harper & Row, 1973. Galbraith, J. R., Designing Organizations: An Executive Brieng on Strategy, Structure and Process. San Francisco: Jossey-Bass, 1995. Nadler, D.A., Gerstein, M.S., Shaw, R.B, "Organizational Architecture: Designs for Changing Organizations". San Francisco: Jossey-Bass, 1992. www.google.com www.yahoo.com www.rediff.com