i was recently going to search some material on Organizational culture so i decided put this on our site for suggestion....
i have collected some material but know idea how realivent it is to us as an HR proffesional.
From India, Pune
4i have collected some material but know idea how realivent it is to us as an HR proffesional.
From India, Pune
Hi
I would suggest you to make questionaire on the basis of data you gathered. Create some dimensions that you are going to assess.
U have the data for standardization. Find out where ur organization stands on the basis of the the questionaire u created.
On the basis of the result, you can design a follow up plan, like the areas where ur organization is on par, areas of improvement etc.
Cheers!
Shashank
From India
I would suggest you to make questionaire on the basis of data you gathered. Create some dimensions that you are going to assess.
U have the data for standardization. Find out where ur organization stands on the basis of the the questionaire u created.
On the basis of the result, you can design a follow up plan, like the areas where ur organization is on par, areas of improvement etc.
Cheers!
Shashank
From India
Organizational chart
An organizational chart is a chart which represents the structure of an organization in terms of rank. The chart usually shows the managers and sub-workers who make up an organization. The chart also shows relationships between staff in the organization which can be:
• Line - direct relationship between superior and subordinate.
• Lateral - relationship between different departments on the same hierarchical level.
• Staff - relationship between a managerial assistant and other areas. The assistant will be able to offer advice to a line manager. However, they have no authority over the line manager actions.
• Functional - relationships between specialist positions and other areas. The specialist will normally have authority to insist that a line manager implements any of their instructions.
In many large companies the organization chart can be large and incredibly complicated and is therefore sometimes dissected into smaller charts for each individual department within the organization.
There are three different types of organization charts:
• Hierarchical
• Matrix
• Flat
Limitations of an organizational chart
There are several limitations with organizational charts:
• It only shows 'formal relationships' and tells nothing of the pattern of human (social) relationships which develop.
• It shows nothing about the managerial style adopted (eg autocratic or democratic)
• It very quickly becomes out-of-date, especially in large organizations who change their staff regularly.
The Benefits of Organization Charts
Organization charts are an extremely effective way to communicate organizational, employee and enterprise information. An org chart makes it easier for people to understand large amounts of information as a visual picture rather than as a table of names and numbers.
Organizational charts provide the greatest value when used as a framework for managing change and communicating current organizational structure. When fully utilized, org charts allow managers to make decisions about resources, provide a framework for managing change and communicate operational information across the organization.
Using organization chart software Human Resources can create org charts automatically from HR databases and distribute them to management. Managers are then able to quickly visualize the organization and have the salary, gender and tenure information needed for decision-making purposes. Simply put, managing change is much easier when you can visualize the organization.
Organizational charts provide managers with specific departmental information that can then be used as a baseline for planning, budgeting and workforce modeling. It's easy to collaborate on important structural and personnel decisions when you have the overall picture along with the smaller views that make up that bigger picture. Organizational charts can be linked directly to spreadsheets or budgeting tools for interactive what-if analysis, making planning and decision making easier. Those organizational charts can then be used to provide scenarios back to executives, finance and HR for evaluation and approval. Managers may also use organizational charts to communicate and solicit feedback from their employees to build future plans.
When organization charts are published and distributed to an entire organization, you have a compelling method for communicating valuable organizational information to all employees. Org charts are ideal for sharing the organization's strategic vision, as well as defining responsibilities, dependencies and relationships. Good chart also allows you to organize your team with clear responsibilities, titles and lines of authority. No document carries such important information, so concisely, and so easy to understand as an organizational chart.
Organization Charts Made Easy
Purpose of Organization Charts
Traditional Box-style Chart
Indented List Chart Recommended!
Example
Optional Techniques
Purpose of Organization Charts
Organization charts are used to display in graphical form the way work is distributed in an organization. The direct supervisor-subordinate reporting relationships are shown clearly and intuitively.
Traditional Box-style Chart
The most commonly known format for organization charts is the box-style chart. There is nothing to preclude you from using this format. However, it comes with some disadvantages. Where an organization is small, the displayed chart will fit on both a printed page and within the computer screen window. As the organization size grows, the layout quickly expands beyond the boundaries of the page or screen. Shrinking the image to fit quickly reduces its legibility.
Example of Traditional Chart
Indented List or "Treeview" Chart
The indented list chart or "tree chart" is a format that is gaining popularity. It is simply another way to display hierarchical data. This format has been used in science for a very long time. It has come to the forefront because of the ease with which such charts can be generated and displayed using computers.
The method requires no special software. A chart can be "drawn" in minutes using any word processor or text editor. The chart begins with the most senior position in the ministry or agency. The "child" positions (immediate subordinates) are listed on separate lines immediately beneath the "parent" or supervisory position and they are indented one tab space.
For the purpose of job descriptions, simply insert the "manager tree" starting with the deputy minister or agency head, and trace the position "lineage" down to the topic position and its "siblings".
Example of Indented List Chart
Deputy Minister
Assistant Deputy Minister Corporate Services
Executive Director Finance and Administration, ML8, 00001234
Administrative Secretary, Clerk Steno R11, 00002345
Manager, Budget & Financial Services, ML4, 00003456
Budget Analyst, Finance Officer R21, 00004567
Senior Financial Analyst, Finance Officer (U/R), 00005678
Financial Analyst, Finance Officer R14, 00006789
Manager Finance & Admin Information Systems, ML3, 00007890
Records Officer, Admin Officer R18, 00002234
Administration Clerk, Clerk R9, 00003345
Receptionist, Office Assistant R7, 00004456
Note that this is the same chart as the box chart example, but it offers more information in less space. It took only minutes to prepare and required no special software.
Optional Techniques
• Highlight the topic position by using bold face and underlining, as shown above.
• Staff positions, such as secretaries, may be shown in italics so as to distinguish them from line positions.
• Position numbers and classification levels should be included if the chart is intended for inclusion in a job description.
• Include remarks such as "vacant", "temporary" or "under review" (u/r) as required.
• Connect positions in a dotted line relationship by adding the suffix "Dotted" to the end of each of the two "position lines".
• If names of incumbents are not important, handle multiple identical positions by entering one line only and insert the number of positions in brackets.
Building Your Organizational Chart
It’s likely that you’ve seen the very standard organizational chart: the president/CEO on top, followed up upper management, followed by middle management, followed by employees or front line staff. Unfortunately, it’s not as easy as that when you’re growing. However, it is important to have an organizational chart.
As you grow, a posted and visible (but flexible) organizational chart will help you to make sure you maintain control over your business and that new staff know who to turn to for guidance and who to listen to for direction. But there are a few ways to create a business plan… which one is right for you?
You can divide your business up by region, so the president is at the top and regional upper management control employees in each region.
• Advantages: this type lets your business react to regional changes and helps to decentralize decision making… making your job easier!
• Disadvantages: this type sometimes leads to inefficient and costly duplication of administrative services (for example, every region ends up with a financial person or a photocopier lease when those assets could be centralized for more cost effective use).
You can divide up your business functionally, so that the president is at the top and the upper management is divided into business types like production, marketing, and finance.
• Advantages: this type lets each manager make changes and decisions that are appropriate for their specific area of the business (production might work at night when it’s cooler so the machines don’t overheat while sales needs to work in the day when the customers are around).
• Disadvantages: depending on the type of business you have, one or two managers could be loaded down with too many employees while other managers are walking around with little to do.
These are two very popular forms of organization for businesses.
Success tips:
• Rather than going for the very traditional approach of the organizational chart that looks like a family tree, consider an organizational chart that looks more like a molecule. You can use a combination of regional and functional upper management, each with their own teams but be sure to connect one team with another to help ensure improved communication and efficiency.
• Encourage a spirit of customer service in your organization by putting the customer at the top of our organizational chart and not yourself. Remind your employees constantly that they are there to serve the customer.
• Give a lot of thought to your organizational chart before you publish it. Companies that provide a constantly updated organizational chart to their employees create confusion in the workplace and make it difficult for people to know who is in charge.
• A short organizational chart (one in which there are not a lot of steps between the CEO and the employees) is both good and bad: It’s good because the employees feel like there is very close communication with the boss, making the company seem like a tight-knit family. It’s bad because employees may perceive that there is little room for advancement and move on.
• Aside from having employees answer directly to their supervisor, there should be some kind of opportunity for them to be able to speak frankly to another person at their supervisor’s level. This is especially important if your company does not have an HR department. Employees who can mention concerns they have with their supervisor to another supervisor will help to reduce turnover if there is a problem with one of your middle managers.
Organization Charts as a Management Tool
Organization Charts, or Org Charts for short, are used to show people the intended structure of the organization. This "formal" organization is supposed to reflect the power structure of the company. Sometimes the Org Charts only serve to confuse people as to what the structure really is. This is usually not intentional, but rather REFLECTS the confusion of the people involved.
However, it is also possible to use an Org Chart as a management tool, to further the achievement of your organization's goals. We will examine typical examples of "standard" Org Charts. We will look at confusing Org Charts. Finally, we will discuss the use of the Org Chart as a management tool.
"Standard" Organization Charts
Standard Org Charts typically are used to show people the intended structure of the organization.
This "formal" organization is supposed to reflect the power structure of the company. Often, it only reflects the responsibility structure. The real power in the organization often follows lines of communications instead of lines in the Org Chart.
The charts typically are pyramidal in shape. They show the person in charge at the top. Below them are clustered their subordinates, usually in progressively smaller boxes. Usually, individuals shown on the same horizontal level in the Org Chart are perceived to be "peers" within the organization.
This Org Chart of the Imperial College’s Department of Computing (DOC) is typical of the pyramid chart. The Head of Department has five directors who report to him directly, plus a Deputy Head and a search committee. Each of the Directors has their direct reports shown in the green ovals below their committees.
Confusing Organization Charts
Sometimes the Org Charts can confuse people as to what the structure really is. This is usually not intentional, but rather reflects the confusion of the people involved. If you are unsure of the group's functional relationships, or if they frequently change, it is virtually impossible to accurately diagram them.
Perhaps the most common place to find confusing Org Charts is in the US federal government. The Org Chart for the Oak Ridge National Laboratory’s Computer Science & Mathemtics Division does not rapidly convey an understanding of the Organization’s structure. It seems to suggest that eleven functions report directly to the Director.
While the span of control (the number of direct reports that a manager can effectively supervise) does vary considerably, I find it hard to believe that this is an optimally functioning organization. I suspect some of the functions’ leaders are "more equal". If we were to chart the communications flow within this organization, and the amount of time each subordinate spent with the director, some of the direct reports would probably need to be reclassified as subordinates of other functions.
Organization Charts as a Management Tool
Org Charts are usually a reactive, rather than a proactive, device. We have created an organization, or allowed one to evolve, and it has grown. It is no longer clear to the people within the organization, or to the people with whom they interact, who is responsible for what. So we draw up a bunch of boxes and lines to show everybody who does what. Then we add dashed lines and similar artificial devices to show that what we drew first isn’t really always the case.
A better option, however, is to craft an Org Chart that reflects where you want the organization to go, rather than simply reflects how it is now. If you want a flat, horizontal organization, draw the Org Chart that way. Show that six or eight (or even eleven as we saw above) managers report to the VP. Show that all ten programmers report directly to the Project Manager.
For examples of more types of org charts, including the way an org chart should be done, keep reading.
Some organizations need tight control. NASD Regulation, Inc., the independent regulatory subsidiary of the National Association of Securities Dealers, is a case in point. Their Org Chart shows the more pyramidal structure.
If your organization relies on quality circles or production teams to accomplish its mission, you should show that in your Org Chart. Don’t feel constrained to stick to horizontal groupings and vertical lines. If your employees will more clearly understand their roles by doing so, you can use circles, inverted triangles, or whatever else you need.
There are many software products on the market to help you show how you want your organization to function.
OrgPlus is an example of the kinds of tools that can be used to clarify many aspects of the business, including Org Charts.
The Way It Should Be Done
The example below is a representation of an Org Chart, which impressed me greatly. It was released to usher in a new era for a company that required creative, new action from all its employees.
It clearly shows the flat, horizontal structure intended to foster communication and innovation. It clearly shows the team formed by the top two officers, indicative of what the employees are expected to do. Yet it retains the unequivocal lines of final responsibility. The President is clearly leading the company, but everyone else knows they have to do their part to succeed.
The Way an Org Chart Should Be
It is still too early to tell if this Org Chart will have the desired effect. It has been in place only a couple of weeks. However, the company officers have clearly used it as an effective management tool to help drive their organization toward its new goals.
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If you have any questions or comments about this article, or if there is an issue you would like us to address, please post them on our Management Forum to share with the entire group.
Departmentation (Grouping)
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One reason organizations exist is to do things that would be hard for one person to do by themselves. For example, it's hard to conceive of one person building an office building. Instead, we have organizations of thousands of people with diverse skills that work together to build buildings. However, coordinating, controlling and just keeping track of a lot of individuals introduces its own problems.
One way to solve these problems is to create a hierarchical system of supervision, so that small groups of workers (up to say, 50 people) are supervised by coordinators (managers). Depending on how many people there are in the organization, the coordinators themselves need to be organized into groups supervised by higher level managers, and so on. Part and parcel of this hierarchical supervisory system is the cutting up of the organization into groups (departments).
The question arises: On what basis should we carve up the members of the organization into subunits? What would happen if we did it randomly, without regard for tasks? One problem would be that each manager would have to be aware of what needed to be done in every area of the organization, in order to direct his/her workers. This would be impossible in most cases.
Common Bases For Departmentation
What organizations actually do is group people in a way that relates to the task they perform. This still leaves a lot of possibilities. Here are six common bases for Departmentation:
1. Knowledge and Skill. People are grouped by what they know. For example, hospitals have departments like Neurology, Allergy, Cardiology, Internal Medicine, Gastro-Enterology, etc.
2. Work Process. Workers are grouped based on the process or activity used by the worker. For example, a manufacturing company may create separate casting, welding and machining groups. Often, it is the underlying technology that determines the departmentation. For example, a print shop may have separate letterpress and offset departments -- two different processes for getting the same outputs.
3. Business Function. Grouping by the basic function in the organization: purchase supplies, raise capital, generate research, etc. This leads to the familiar departments of manufacturing, marketing, engineering, finance, and so on.
4. Time. When work is done. For example, shifts in a factory or hospital or hotel.
5. Output. Grouping based on the products or services that the employee works on. For example, a manufacturer may have different divisions for each of its product lines.
6. Client. Grouping based on the type of clients their work is ultimately sold to. For example, computer companies often have different sales departments for home, small business, educational, government and large business customers.
7. Place. Groups are based on the geographical areas that they serve. For example, during WW2, the US War Dept. was organized into 7 "theatres" corresponding to regions of the world where the US was fighting. Similarly, Post Offices are often divided by regions and zipcodes.
Actually, some of these (like #1-Knowledge and #2-Work Process) can be impossible to distinguish. In general, it is more useful to think in terms of two basic categories, which are generally called function and market, but which you might think of as Means and Ends. Here's how the seven categories above fall into the two supercategories, along with some other information about the two categories:
Means (Function) Ends (Market)
Specific
Types • knowledge & skill
• work process
• business function
• time • Output
• Client
• Place
Kinds of
Companies • small organizations of various kinds
• large-scale manufacturing — assembly line production
• professional bureaucracies: universities, hospitals • Often found in really big orgs and multinationals
• divisionalized forms & conglomerates
• Orgs with high product line heterogeneity
• Orgs in fast moving industries
• Orgs with extra resources available, like Microsoft
Strengths • Works well with smaller organizations
• Groups skill sets so they can consult with each other and socialize each other: put all the accountants together, all the factory workers together, etc.
• Avoids duplication of efforts: just one HR dept., one operations division, etc.
• Allows economies of scale: single purchasing dept. can order large quantities of paper for all parts of the organization • Allows different parts of org to evolve in different ways at different speeds to adapt to the complex environment
• Some sense of ownership of product: in effect creates many small companies responsible for one small product.
• Sense of belonging to team and of common fate.
Weaknesses • Does not create sense of ownership/responsibility for final product:
• Encourages finger-pointing: "not my department"
• People in different functional areas don’t understand the whole, nor other parts • Can create significant duplication of effort and knowledge throughout org.
• Innovations don't spread: brilliant new time management system in one division is unknown in other divisions
• No economies of scale
Matrix & Project-based Organizations
An attempt to organize company according to both function and market dimensions simultaneously, so that each person belongs to both a functional department and a product/market department. Some people therefore report to two bosses.
The big advantage of matrix organizations is that they are great for sharing of information and enabling people to coordinate their efforts with larger organizational goals and strategies.
The problem, of course, is that having two bosses can be confusing, and is a situation that is easily exploited by subordinates, who can pit their bosses against each other. The subordinates can also be unwitting victims of power struggles among the bosses.
The matrix form works best when one dimension is a permanent affiliation (typically functional), and the other is a temporary dimension, such as a client project. So a person is, say, a marketing research analyst, and is presently assigned to the Carnation project, which will take 6 weeks, and will then be assigned to the R.J. Reynolds project, and so on.
Criteria for Choosing
An organization can divide itself into departments any way it wants using any criteria it wants -- there is no law about it. It doesn't have to be rational. However, there is a theory (developed by James Thompson) about what is the best way to do it. According to the theory, there are 4 basic rational criteria for choosing the bases for departmentation:
1. Work-flow interdependence.
This refers to the flow of product from person to person as it is being constructed. There are four kinds of increasingly tight interdependence:
• pooled: sharing of resources and consequences only. In other words, the positions have really nothing to do with each other, they are only interdependent in the general sense of being part of the same company, so they are funded by the same budget.
• sequential: work is fed from one position to the next, like an assembly line
• reciprocal: work passed back and forth between a pair of positions/tasks
• team: work flows around and through a network of positions, like the ball in a basketball game.
Now here is the key idea: where work-flow interdependence is critical, rational organizations try to group tasks/positions together which are more tightly interdependent. That is, operations which are team-interdependent should be grouped first (i.e., at the lowest levels in the organization), operations that are reciprocal-interdependent should be grouped second, and so on. This is illustrated in the figure below, which gives the organization chart of a hypothetical manufacturing organization.
Counting from the bottom up, the first and second groupings are by work process, the third is by business function, and the fourth is by output (product). Now think about it in terms of interdependencies. The tightest interdependencies are between the turning, milling and drilling operations. These are team or reciprocal interdependencies. So they are the first to be grouped together (under "General Foreman: Fabricating").
The next tightest interdependencies are the sequential interdependencies between fabrication and assembly, since first you make the materials, then you assemble them. So these are grouped together under "Manager: Manufacturing".
There are also sequential interdependencies between the business functions of design (engineering), manufacturing, and marketing. So at the next level up, we merge all of these under "Vice-President: Snowblowers".
Above this level, most of the workflow interdependencies are only of the pooled variety: the snowblower department really has little to do with the frostbite remedy department, except that they all dip into the same general pool of organizational resources (capital, management talent, physical assets, etc.).
2. Process interaction.
This refers to consultations among people about how to do things. For example, lawyers in a corporation consult each other to take advantage of specialized skills and to develop a common approach to things.
3. Economies of scale.
Groups formed in order to achieve economies of scale. For example, if each department in a factory has a maintenance person, it may be inefficient because the small departments don't have quite enough work for a fulltime maintenance person, while the big departments have too much.
This approach also encourages specialization, as within a central maintenance department there can be specialists for different kinds of problems.
4. Social considerations
Groups are formed in order to minister to people's social needs. This often leads to functional groupings because people are comfortable with their "own kind" (as in technical people prefer technical people, sales types like sales types, etc.).
Often there are individual concerns, like two people who don't get along, the force certain departments to be placed under other departments, or not placed under certain departments.
Organization Chart
Organizational charts are detailed representations of organization structures and hierarchies. They are typically used to provide both employees and individuals outside the organization with a "snapshot" picture of it's reporting relationships, divisions of work, and levels of management. Obviously, smaller firms—whether they consist of a single owner of a home-based business, a modest shop of a few employees, or a family-owned business with a few dozen workers—are less likely to utilize organization charts, since the information that is gleaned from chart representations is typically pretty self-evident with such businesses. "Small organizations can get along very well without them as long as everyone understands what they are to do and who they are to do it with, " stated James Gibson, John Ivancevich, and James Donnelly in Organizations: Behavior, Structure, Processes. But many consultants and small business owners contend that an organization chart can be a useful tool for growing firms.
Business owners endeavoring to allocate responsibilities, activities, and management authority to various employees also have to make certain that they coordinate the activities of those employees to avoid gaps and/or redundancies in operations and management. "It is helpful to think of organizational design elements as building blocks that can be used to create a structure to fulfill a particular purpose, " stated Phyllis and Leonard Schlesinger in The Portable MBA in Management. "A structure is built by defining the requirements of each individual job and then grouping the individual jobs into units. These units are grouped into larger and larger units and coordinating (or integrating) mechanisms are established for these units. In this way, the structure has been built to support organizational goals and achieve the key factors for success." Ideally, a detailed organizational chart will provide the business owner or manager with an accurate overview of the relationships of these units/responsibilities to one another and a reliable indication as to whether the firm is positioned to meet the business's fundamental goals.
Advantages and Disadvantages Associated With Organization Charts
While organizational charts are commonly used by mid- and large-sized companies, as well as by significant numbers of smaller businesses with varied operations and a substantial workforce, their usefulness has been a subject of some debate.
ADVANTAGES. Supporters of organization charts claim that they are tools that can effectively delineate work responsibilities and reporting relationships. "Managers of different organizational subunits, " wrote Gibson, Ivancevich, and Donnelly, "do not understand how their work fits into the work of other subunits. In the absence of an organization chart to clarify relationships, illogical and confusing ones will develop. In fact, the very process of charting the organization is a good test of its soundness, because any relationship that cannot be charted is likely to be unsound and therefore confusing to those working in it."
Supporters also argue that org charts can be particularly useful as a navigational tool when small businesses expand their operations. "The argument that organization charts are necessary only when the organization becomes too big for any one individual to manage does not hold, " claimed Gibson, Ivancevich, and Donnelly. "In many instances, small firms that do rather well in the early stages of their development begin to fail when the founders can no longer manage in their personal styles. The transition from successful small firm to successful large firm is impaired because the employees are doing jobs that fit their personality and unique skills rather than jobs necessary for organizational performance. Organization charts and supporting documents are necessary from the very beginning of a firm's existence, not just when it gets too big for one person to manage."
DISADVANTAGES. The above perspective is not universally accepted by business consultants, researchers, executives, and managers, however. Detractors point out that formal organization charts do not recognize informal lines of communication and influence that are quite vital in many business settings. Writing in Perspectives on Behaviors in Organizations, contributors David A. Nadler and Michael L. Tushman characterized organization charts as "narrow and static in perspective…. It excludes such factors asleader behavior, the impact of the environment, informal relations, power distribution, etc. Such a model can only capture a small part of what goes on in an organization."
Critics of organization charts also sometimes charge that the diagrams may paint a misleading picture of the importance and influence of various people within an organization. Charts are, out of necessity, somewhat streamlined representations that only provide so much detail to a user. In some instances, for example, an organization chart may depict two employees as being equal in power and influence, when in reality, one of the individuals is rapidly ascending through the ranks and has the ear of the firm's principal decision makers, while the other may be regarded as steady but unremarkable (or even worse, an individual whose position has deteriorated from a higher level over the previous years).
"Perhaps the most damaging criticism of organization charts is that they encourage individuals to take a very narrow view of their jobs, " wrote Gibson, Ivancevich, and Donnelly. "Job definitions imply what people will not do as well as clarifying what they will do. The result is an organization that is not responsive to change, that lacks flexibility. The organization chart and all the supporting documentation …become substitutes for action and creative responses. In fact, some managers adamantly oppose the creation of organization charts even when employees complain that they need some direction to understand what they should do. These managers respond by saying that it is better to go ahead and fail than to do nothing."
Using Organization Charts to Study Organization Structure
As alluded to earlier, the process of constructing an organization chart is sometimes cited as a valuable means by which a company can test its structural soundness. Proponents say that charts can be used to ensure that, as one executive told Inc.'s Teri Lammers, "no one's productivity is constrained by the structure."
Researchers, consultants, and executives note that this benefit can be even more pronounced in today's business world, which has seen dramatic changes in operating philosophies and management direction over the past few decades. Indeed, corporations are increasingly implementing innovative organizational redesigns in efforts to increase their productivity. The growth in cross-functional teams and reorganizations, for example, can easily blur reporting and operational relationships between various segments of a business. It is important, then, for businesses that do rely on organizational charts to continually examine and update those diagrams to ensure that they reflect current business realities. In fact, the changes in organizational structures have spurred innovative changes in the format of many organizational charts. Whereas traditional models have been formatted along general "up-down" lines, newer models sometimes utilize flattened or "spoke" frameworks.
ORGANIZATIONAL STRUCTURE
Organizational structure depends on the product to be developed. Wheelwright and Clark define a continuum of organizational structures between two extremes, functional organizations and project organizations. Functional organizations are organized according to technological disciplines. Senior functional managers are respnsible for allocating resources. The responsibility for the total product is not allocated to a single person. Coordination occurs through rules and procedures, detailed specifications, shared traditions among engineers and meetings (ad hoc and structured). Products that need a high level of specialized knowledge require a functionally organized structure.
A light-weighted matrix organization remains functional and the level of specialization is comparable to that found in the functional mode. What is different, is the addition of a product manager who coordinates the product creation activities through liaison representatives from each function. Their main tasks are: to collect information, to solve conflicts and to facilitate achievement of overall project objectives. Their status and influence are less as compared to functional managers, because they have no direct access to working-level people.
A heavy-weighted matrix organization exists of a matrix with dominant the project structure and underlying the functional departments. The product manager has a broader responsibility. Manufacturing, marketing and concept development are included. The status and influence of the product manager, who is usually a senior, is the same or higher as compared to the functional manager. compared to functional managers, because they have no direct access to working-level people.
A project organization exists of product oriented flows: project and teams. The project members leave their functional department and devote all their time to the project. They share the same location. The professionals are less specialized and have brioader tasks, skills and responsibilities. The functional manager is responsible for the personnel development and the more detailed technology research in the functional groups.
Companies can be classified to their organizational structures. Another variable companies can be classified to is the nature of the projects undertaken. We characterize projects by the number of employees needed to perform the tasks, or workload, and the number of tasks that are fundamentally different in nature. An example of the latter aspect is PCB development and structural design.
Another way to classify organization structure is by one of the following four categories:
I. The product to be developed is comprehensible for one person. One person is likely to have all the knowledge needed to develop Manufacturing and Assembly. The development department in companies that undertake these kinds of projects are usually very small. If a company consists of more than one department, it is usually structured as a functional organization.
II. The product to be developed has a fairly low complexity, but total work is high. These kind of products are likely to be developed within one functional department. A research department may also be an example of a department in which type II projects are undertaken. Are more departments involved, then the light weighted matrix structure is preferable. Employees are involved on a full-time basis. Tasks may be performed concurrently. The sequence can be determined using the Design Structure Matrix.
III. The product to be developed consists of a lot of different elements, such as software, PCB, power supply and mechanical structure. The product is however in the engineering phase, i.e. it is clear what needs to be done to get the product into production. Various disciplines perform their own tasks. These tasks have mostly a low workload. Employees cannot work full-timee on one project. This creates a complex situation, that may be compared to a job shop situation in production logistics. Though the comparison between manufacturing and product development is not accepted by all product development managers, it may yield good results. Studying each step in the Product Development Process and fluctuations in workloads reveals ways to reduce variation and eliminate bottlenecks. It is necessary to view the Product Development Process as a process and not as a list of projects. Three important findings regarding this are:
1. Projects get done faster if the organization takes on fewer at a time.
2. Investments to relieve bottlenecks yield disproportionately large time-to-market benefits.
3. Eliminating unnecessary variation in workloads and work processes eliminates distractions and delays, thereby freeing up the organization to focus on the creative parts of the task.
Creating cross-functional concurrent engineering teams is the right way to develop products. However, the pitfall is too many project at the same time, so that key people from engineering, marketing and manufacturing work at five or more projects at once. This results in congestion. Striving to work at 100% of the product development capacity legthens product development lead times enormously. A more realistic percentage is 80%. Attention must be focused on bottlenecks, these days most commonly found at the software development side of the project.
IV. The product is complex. Total work is high. Employees can thus participate on a full-time basis. A project organization is the most appropriate organizational structure for these kind's of products.
From India, Pune
An organizational chart is a chart which represents the structure of an organization in terms of rank. The chart usually shows the managers and sub-workers who make up an organization. The chart also shows relationships between staff in the organization which can be:
• Line - direct relationship between superior and subordinate.
• Lateral - relationship between different departments on the same hierarchical level.
• Staff - relationship between a managerial assistant and other areas. The assistant will be able to offer advice to a line manager. However, they have no authority over the line manager actions.
• Functional - relationships between specialist positions and other areas. The specialist will normally have authority to insist that a line manager implements any of their instructions.
In many large companies the organization chart can be large and incredibly complicated and is therefore sometimes dissected into smaller charts for each individual department within the organization.
There are three different types of organization charts:
• Hierarchical
• Matrix
• Flat
Limitations of an organizational chart
There are several limitations with organizational charts:
• It only shows 'formal relationships' and tells nothing of the pattern of human (social) relationships which develop.
• It shows nothing about the managerial style adopted (eg autocratic or democratic)
• It very quickly becomes out-of-date, especially in large organizations who change their staff regularly.
The Benefits of Organization Charts
Organization charts are an extremely effective way to communicate organizational, employee and enterprise information. An org chart makes it easier for people to understand large amounts of information as a visual picture rather than as a table of names and numbers.
Organizational charts provide the greatest value when used as a framework for managing change and communicating current organizational structure. When fully utilized, org charts allow managers to make decisions about resources, provide a framework for managing change and communicate operational information across the organization.
Using organization chart software Human Resources can create org charts automatically from HR databases and distribute them to management. Managers are then able to quickly visualize the organization and have the salary, gender and tenure information needed for decision-making purposes. Simply put, managing change is much easier when you can visualize the organization.
Organizational charts provide managers with specific departmental information that can then be used as a baseline for planning, budgeting and workforce modeling. It's easy to collaborate on important structural and personnel decisions when you have the overall picture along with the smaller views that make up that bigger picture. Organizational charts can be linked directly to spreadsheets or budgeting tools for interactive what-if analysis, making planning and decision making easier. Those organizational charts can then be used to provide scenarios back to executives, finance and HR for evaluation and approval. Managers may also use organizational charts to communicate and solicit feedback from their employees to build future plans.
When organization charts are published and distributed to an entire organization, you have a compelling method for communicating valuable organizational information to all employees. Org charts are ideal for sharing the organization's strategic vision, as well as defining responsibilities, dependencies and relationships. Good chart also allows you to organize your team with clear responsibilities, titles and lines of authority. No document carries such important information, so concisely, and so easy to understand as an organizational chart.
Organization Charts Made Easy
Purpose of Organization Charts
Traditional Box-style Chart
Indented List Chart Recommended!
Example
Optional Techniques
Purpose of Organization Charts
Organization charts are used to display in graphical form the way work is distributed in an organization. The direct supervisor-subordinate reporting relationships are shown clearly and intuitively.
Traditional Box-style Chart
The most commonly known format for organization charts is the box-style chart. There is nothing to preclude you from using this format. However, it comes with some disadvantages. Where an organization is small, the displayed chart will fit on both a printed page and within the computer screen window. As the organization size grows, the layout quickly expands beyond the boundaries of the page or screen. Shrinking the image to fit quickly reduces its legibility.
Example of Traditional Chart
Indented List or "Treeview" Chart
The indented list chart or "tree chart" is a format that is gaining popularity. It is simply another way to display hierarchical data. This format has been used in science for a very long time. It has come to the forefront because of the ease with which such charts can be generated and displayed using computers.
The method requires no special software. A chart can be "drawn" in minutes using any word processor or text editor. The chart begins with the most senior position in the ministry or agency. The "child" positions (immediate subordinates) are listed on separate lines immediately beneath the "parent" or supervisory position and they are indented one tab space.
For the purpose of job descriptions, simply insert the "manager tree" starting with the deputy minister or agency head, and trace the position "lineage" down to the topic position and its "siblings".
Example of Indented List Chart
Deputy Minister
Assistant Deputy Minister Corporate Services
Executive Director Finance and Administration, ML8, 00001234
Administrative Secretary, Clerk Steno R11, 00002345
Manager, Budget & Financial Services, ML4, 00003456
Budget Analyst, Finance Officer R21, 00004567
Senior Financial Analyst, Finance Officer (U/R), 00005678
Financial Analyst, Finance Officer R14, 00006789
Manager Finance & Admin Information Systems, ML3, 00007890
Records Officer, Admin Officer R18, 00002234
Administration Clerk, Clerk R9, 00003345
Receptionist, Office Assistant R7, 00004456
Note that this is the same chart as the box chart example, but it offers more information in less space. It took only minutes to prepare and required no special software.
Optional Techniques
• Highlight the topic position by using bold face and underlining, as shown above.
• Staff positions, such as secretaries, may be shown in italics so as to distinguish them from line positions.
• Position numbers and classification levels should be included if the chart is intended for inclusion in a job description.
• Include remarks such as "vacant", "temporary" or "under review" (u/r) as required.
• Connect positions in a dotted line relationship by adding the suffix "Dotted" to the end of each of the two "position lines".
• If names of incumbents are not important, handle multiple identical positions by entering one line only and insert the number of positions in brackets.
Building Your Organizational Chart
It’s likely that you’ve seen the very standard organizational chart: the president/CEO on top, followed up upper management, followed by middle management, followed by employees or front line staff. Unfortunately, it’s not as easy as that when you’re growing. However, it is important to have an organizational chart.
As you grow, a posted and visible (but flexible) organizational chart will help you to make sure you maintain control over your business and that new staff know who to turn to for guidance and who to listen to for direction. But there are a few ways to create a business plan… which one is right for you?
You can divide your business up by region, so the president is at the top and regional upper management control employees in each region.
• Advantages: this type lets your business react to regional changes and helps to decentralize decision making… making your job easier!
• Disadvantages: this type sometimes leads to inefficient and costly duplication of administrative services (for example, every region ends up with a financial person or a photocopier lease when those assets could be centralized for more cost effective use).
You can divide up your business functionally, so that the president is at the top and the upper management is divided into business types like production, marketing, and finance.
• Advantages: this type lets each manager make changes and decisions that are appropriate for their specific area of the business (production might work at night when it’s cooler so the machines don’t overheat while sales needs to work in the day when the customers are around).
• Disadvantages: depending on the type of business you have, one or two managers could be loaded down with too many employees while other managers are walking around with little to do.
These are two very popular forms of organization for businesses.
Success tips:
• Rather than going for the very traditional approach of the organizational chart that looks like a family tree, consider an organizational chart that looks more like a molecule. You can use a combination of regional and functional upper management, each with their own teams but be sure to connect one team with another to help ensure improved communication and efficiency.
• Encourage a spirit of customer service in your organization by putting the customer at the top of our organizational chart and not yourself. Remind your employees constantly that they are there to serve the customer.
• Give a lot of thought to your organizational chart before you publish it. Companies that provide a constantly updated organizational chart to their employees create confusion in the workplace and make it difficult for people to know who is in charge.
• A short organizational chart (one in which there are not a lot of steps between the CEO and the employees) is both good and bad: It’s good because the employees feel like there is very close communication with the boss, making the company seem like a tight-knit family. It’s bad because employees may perceive that there is little room for advancement and move on.
• Aside from having employees answer directly to their supervisor, there should be some kind of opportunity for them to be able to speak frankly to another person at their supervisor’s level. This is especially important if your company does not have an HR department. Employees who can mention concerns they have with their supervisor to another supervisor will help to reduce turnover if there is a problem with one of your middle managers.
Organization Charts as a Management Tool
Organization Charts, or Org Charts for short, are used to show people the intended structure of the organization. This "formal" organization is supposed to reflect the power structure of the company. Sometimes the Org Charts only serve to confuse people as to what the structure really is. This is usually not intentional, but rather REFLECTS the confusion of the people involved.
However, it is also possible to use an Org Chart as a management tool, to further the achievement of your organization's goals. We will examine typical examples of "standard" Org Charts. We will look at confusing Org Charts. Finally, we will discuss the use of the Org Chart as a management tool.
"Standard" Organization Charts
Standard Org Charts typically are used to show people the intended structure of the organization.
This "formal" organization is supposed to reflect the power structure of the company. Often, it only reflects the responsibility structure. The real power in the organization often follows lines of communications instead of lines in the Org Chart.
The charts typically are pyramidal in shape. They show the person in charge at the top. Below them are clustered their subordinates, usually in progressively smaller boxes. Usually, individuals shown on the same horizontal level in the Org Chart are perceived to be "peers" within the organization.
This Org Chart of the Imperial College’s Department of Computing (DOC) is typical of the pyramid chart. The Head of Department has five directors who report to him directly, plus a Deputy Head and a search committee. Each of the Directors has their direct reports shown in the green ovals below their committees.
Confusing Organization Charts
Sometimes the Org Charts can confuse people as to what the structure really is. This is usually not intentional, but rather reflects the confusion of the people involved. If you are unsure of the group's functional relationships, or if they frequently change, it is virtually impossible to accurately diagram them.
Perhaps the most common place to find confusing Org Charts is in the US federal government. The Org Chart for the Oak Ridge National Laboratory’s Computer Science & Mathemtics Division does not rapidly convey an understanding of the Organization’s structure. It seems to suggest that eleven functions report directly to the Director.
While the span of control (the number of direct reports that a manager can effectively supervise) does vary considerably, I find it hard to believe that this is an optimally functioning organization. I suspect some of the functions’ leaders are "more equal". If we were to chart the communications flow within this organization, and the amount of time each subordinate spent with the director, some of the direct reports would probably need to be reclassified as subordinates of other functions.
Organization Charts as a Management Tool
Org Charts are usually a reactive, rather than a proactive, device. We have created an organization, or allowed one to evolve, and it has grown. It is no longer clear to the people within the organization, or to the people with whom they interact, who is responsible for what. So we draw up a bunch of boxes and lines to show everybody who does what. Then we add dashed lines and similar artificial devices to show that what we drew first isn’t really always the case.
A better option, however, is to craft an Org Chart that reflects where you want the organization to go, rather than simply reflects how it is now. If you want a flat, horizontal organization, draw the Org Chart that way. Show that six or eight (or even eleven as we saw above) managers report to the VP. Show that all ten programmers report directly to the Project Manager.
For examples of more types of org charts, including the way an org chart should be done, keep reading.
Some organizations need tight control. NASD Regulation, Inc., the independent regulatory subsidiary of the National Association of Securities Dealers, is a case in point. Their Org Chart shows the more pyramidal structure.
If your organization relies on quality circles or production teams to accomplish its mission, you should show that in your Org Chart. Don’t feel constrained to stick to horizontal groupings and vertical lines. If your employees will more clearly understand their roles by doing so, you can use circles, inverted triangles, or whatever else you need.
There are many software products on the market to help you show how you want your organization to function.
OrgPlus is an example of the kinds of tools that can be used to clarify many aspects of the business, including Org Charts.
The Way It Should Be Done
The example below is a representation of an Org Chart, which impressed me greatly. It was released to usher in a new era for a company that required creative, new action from all its employees.
It clearly shows the flat, horizontal structure intended to foster communication and innovation. It clearly shows the team formed by the top two officers, indicative of what the employees are expected to do. Yet it retains the unequivocal lines of final responsibility. The President is clearly leading the company, but everyone else knows they have to do their part to succeed.
The Way an Org Chart Should Be
It is still too early to tell if this Org Chart will have the desired effect. It has been in place only a couple of weeks. However, the company officers have clearly used it as an effective management tool to help drive their organization toward its new goals.
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Departmentation (Grouping)
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One reason organizations exist is to do things that would be hard for one person to do by themselves. For example, it's hard to conceive of one person building an office building. Instead, we have organizations of thousands of people with diverse skills that work together to build buildings. However, coordinating, controlling and just keeping track of a lot of individuals introduces its own problems.
One way to solve these problems is to create a hierarchical system of supervision, so that small groups of workers (up to say, 50 people) are supervised by coordinators (managers). Depending on how many people there are in the organization, the coordinators themselves need to be organized into groups supervised by higher level managers, and so on. Part and parcel of this hierarchical supervisory system is the cutting up of the organization into groups (departments).
The question arises: On what basis should we carve up the members of the organization into subunits? What would happen if we did it randomly, without regard for tasks? One problem would be that each manager would have to be aware of what needed to be done in every area of the organization, in order to direct his/her workers. This would be impossible in most cases.
Common Bases For Departmentation
What organizations actually do is group people in a way that relates to the task they perform. This still leaves a lot of possibilities. Here are six common bases for Departmentation:
1. Knowledge and Skill. People are grouped by what they know. For example, hospitals have departments like Neurology, Allergy, Cardiology, Internal Medicine, Gastro-Enterology, etc.
2. Work Process. Workers are grouped based on the process or activity used by the worker. For example, a manufacturing company may create separate casting, welding and machining groups. Often, it is the underlying technology that determines the departmentation. For example, a print shop may have separate letterpress and offset departments -- two different processes for getting the same outputs.
3. Business Function. Grouping by the basic function in the organization: purchase supplies, raise capital, generate research, etc. This leads to the familiar departments of manufacturing, marketing, engineering, finance, and so on.
4. Time. When work is done. For example, shifts in a factory or hospital or hotel.
5. Output. Grouping based on the products or services that the employee works on. For example, a manufacturer may have different divisions for each of its product lines.
6. Client. Grouping based on the type of clients their work is ultimately sold to. For example, computer companies often have different sales departments for home, small business, educational, government and large business customers.
7. Place. Groups are based on the geographical areas that they serve. For example, during WW2, the US War Dept. was organized into 7 "theatres" corresponding to regions of the world where the US was fighting. Similarly, Post Offices are often divided by regions and zipcodes.
Actually, some of these (like #1-Knowledge and #2-Work Process) can be impossible to distinguish. In general, it is more useful to think in terms of two basic categories, which are generally called function and market, but which you might think of as Means and Ends. Here's how the seven categories above fall into the two supercategories, along with some other information about the two categories:
Means (Function) Ends (Market)
Specific
Types • knowledge & skill
• work process
• business function
• time • Output
• Client
• Place
Kinds of
Companies • small organizations of various kinds
• large-scale manufacturing — assembly line production
• professional bureaucracies: universities, hospitals • Often found in really big orgs and multinationals
• divisionalized forms & conglomerates
• Orgs with high product line heterogeneity
• Orgs in fast moving industries
• Orgs with extra resources available, like Microsoft
Strengths • Works well with smaller organizations
• Groups skill sets so they can consult with each other and socialize each other: put all the accountants together, all the factory workers together, etc.
• Avoids duplication of efforts: just one HR dept., one operations division, etc.
• Allows economies of scale: single purchasing dept. can order large quantities of paper for all parts of the organization • Allows different parts of org to evolve in different ways at different speeds to adapt to the complex environment
• Some sense of ownership of product: in effect creates many small companies responsible for one small product.
• Sense of belonging to team and of common fate.
Weaknesses • Does not create sense of ownership/responsibility for final product:
• Encourages finger-pointing: "not my department"
• People in different functional areas don’t understand the whole, nor other parts • Can create significant duplication of effort and knowledge throughout org.
• Innovations don't spread: brilliant new time management system in one division is unknown in other divisions
• No economies of scale
Matrix & Project-based Organizations
An attempt to organize company according to both function and market dimensions simultaneously, so that each person belongs to both a functional department and a product/market department. Some people therefore report to two bosses.
The big advantage of matrix organizations is that they are great for sharing of information and enabling people to coordinate their efforts with larger organizational goals and strategies.
The problem, of course, is that having two bosses can be confusing, and is a situation that is easily exploited by subordinates, who can pit their bosses against each other. The subordinates can also be unwitting victims of power struggles among the bosses.
The matrix form works best when one dimension is a permanent affiliation (typically functional), and the other is a temporary dimension, such as a client project. So a person is, say, a marketing research analyst, and is presently assigned to the Carnation project, which will take 6 weeks, and will then be assigned to the R.J. Reynolds project, and so on.
Criteria for Choosing
An organization can divide itself into departments any way it wants using any criteria it wants -- there is no law about it. It doesn't have to be rational. However, there is a theory (developed by James Thompson) about what is the best way to do it. According to the theory, there are 4 basic rational criteria for choosing the bases for departmentation:
1. Work-flow interdependence.
This refers to the flow of product from person to person as it is being constructed. There are four kinds of increasingly tight interdependence:
• pooled: sharing of resources and consequences only. In other words, the positions have really nothing to do with each other, they are only interdependent in the general sense of being part of the same company, so they are funded by the same budget.
• sequential: work is fed from one position to the next, like an assembly line
• reciprocal: work passed back and forth between a pair of positions/tasks
• team: work flows around and through a network of positions, like the ball in a basketball game.
Now here is the key idea: where work-flow interdependence is critical, rational organizations try to group tasks/positions together which are more tightly interdependent. That is, operations which are team-interdependent should be grouped first (i.e., at the lowest levels in the organization), operations that are reciprocal-interdependent should be grouped second, and so on. This is illustrated in the figure below, which gives the organization chart of a hypothetical manufacturing organization.
Counting from the bottom up, the first and second groupings are by work process, the third is by business function, and the fourth is by output (product). Now think about it in terms of interdependencies. The tightest interdependencies are between the turning, milling and drilling operations. These are team or reciprocal interdependencies. So they are the first to be grouped together (under "General Foreman: Fabricating").
The next tightest interdependencies are the sequential interdependencies between fabrication and assembly, since first you make the materials, then you assemble them. So these are grouped together under "Manager: Manufacturing".
There are also sequential interdependencies between the business functions of design (engineering), manufacturing, and marketing. So at the next level up, we merge all of these under "Vice-President: Snowblowers".
Above this level, most of the workflow interdependencies are only of the pooled variety: the snowblower department really has little to do with the frostbite remedy department, except that they all dip into the same general pool of organizational resources (capital, management talent, physical assets, etc.).
2. Process interaction.
This refers to consultations among people about how to do things. For example, lawyers in a corporation consult each other to take advantage of specialized skills and to develop a common approach to things.
3. Economies of scale.
Groups formed in order to achieve economies of scale. For example, if each department in a factory has a maintenance person, it may be inefficient because the small departments don't have quite enough work for a fulltime maintenance person, while the big departments have too much.
This approach also encourages specialization, as within a central maintenance department there can be specialists for different kinds of problems.
4. Social considerations
Groups are formed in order to minister to people's social needs. This often leads to functional groupings because people are comfortable with their "own kind" (as in technical people prefer technical people, sales types like sales types, etc.).
Often there are individual concerns, like two people who don't get along, the force certain departments to be placed under other departments, or not placed under certain departments.
Organization Chart
Organizational charts are detailed representations of organization structures and hierarchies. They are typically used to provide both employees and individuals outside the organization with a "snapshot" picture of it's reporting relationships, divisions of work, and levels of management. Obviously, smaller firms—whether they consist of a single owner of a home-based business, a modest shop of a few employees, or a family-owned business with a few dozen workers—are less likely to utilize organization charts, since the information that is gleaned from chart representations is typically pretty self-evident with such businesses. "Small organizations can get along very well without them as long as everyone understands what they are to do and who they are to do it with, " stated James Gibson, John Ivancevich, and James Donnelly in Organizations: Behavior, Structure, Processes. But many consultants and small business owners contend that an organization chart can be a useful tool for growing firms.
Business owners endeavoring to allocate responsibilities, activities, and management authority to various employees also have to make certain that they coordinate the activities of those employees to avoid gaps and/or redundancies in operations and management. "It is helpful to think of organizational design elements as building blocks that can be used to create a structure to fulfill a particular purpose, " stated Phyllis and Leonard Schlesinger in The Portable MBA in Management. "A structure is built by defining the requirements of each individual job and then grouping the individual jobs into units. These units are grouped into larger and larger units and coordinating (or integrating) mechanisms are established for these units. In this way, the structure has been built to support organizational goals and achieve the key factors for success." Ideally, a detailed organizational chart will provide the business owner or manager with an accurate overview of the relationships of these units/responsibilities to one another and a reliable indication as to whether the firm is positioned to meet the business's fundamental goals.
Advantages and Disadvantages Associated With Organization Charts
While organizational charts are commonly used by mid- and large-sized companies, as well as by significant numbers of smaller businesses with varied operations and a substantial workforce, their usefulness has been a subject of some debate.
ADVANTAGES. Supporters of organization charts claim that they are tools that can effectively delineate work responsibilities and reporting relationships. "Managers of different organizational subunits, " wrote Gibson, Ivancevich, and Donnelly, "do not understand how their work fits into the work of other subunits. In the absence of an organization chart to clarify relationships, illogical and confusing ones will develop. In fact, the very process of charting the organization is a good test of its soundness, because any relationship that cannot be charted is likely to be unsound and therefore confusing to those working in it."
Supporters also argue that org charts can be particularly useful as a navigational tool when small businesses expand their operations. "The argument that organization charts are necessary only when the organization becomes too big for any one individual to manage does not hold, " claimed Gibson, Ivancevich, and Donnelly. "In many instances, small firms that do rather well in the early stages of their development begin to fail when the founders can no longer manage in their personal styles. The transition from successful small firm to successful large firm is impaired because the employees are doing jobs that fit their personality and unique skills rather than jobs necessary for organizational performance. Organization charts and supporting documents are necessary from the very beginning of a firm's existence, not just when it gets too big for one person to manage."
DISADVANTAGES. The above perspective is not universally accepted by business consultants, researchers, executives, and managers, however. Detractors point out that formal organization charts do not recognize informal lines of communication and influence that are quite vital in many business settings. Writing in Perspectives on Behaviors in Organizations, contributors David A. Nadler and Michael L. Tushman characterized organization charts as "narrow and static in perspective…. It excludes such factors asleader behavior, the impact of the environment, informal relations, power distribution, etc. Such a model can only capture a small part of what goes on in an organization."
Critics of organization charts also sometimes charge that the diagrams may paint a misleading picture of the importance and influence of various people within an organization. Charts are, out of necessity, somewhat streamlined representations that only provide so much detail to a user. In some instances, for example, an organization chart may depict two employees as being equal in power and influence, when in reality, one of the individuals is rapidly ascending through the ranks and has the ear of the firm's principal decision makers, while the other may be regarded as steady but unremarkable (or even worse, an individual whose position has deteriorated from a higher level over the previous years).
"Perhaps the most damaging criticism of organization charts is that they encourage individuals to take a very narrow view of their jobs, " wrote Gibson, Ivancevich, and Donnelly. "Job definitions imply what people will not do as well as clarifying what they will do. The result is an organization that is not responsive to change, that lacks flexibility. The organization chart and all the supporting documentation …become substitutes for action and creative responses. In fact, some managers adamantly oppose the creation of organization charts even when employees complain that they need some direction to understand what they should do. These managers respond by saying that it is better to go ahead and fail than to do nothing."
Using Organization Charts to Study Organization Structure
As alluded to earlier, the process of constructing an organization chart is sometimes cited as a valuable means by which a company can test its structural soundness. Proponents say that charts can be used to ensure that, as one executive told Inc.'s Teri Lammers, "no one's productivity is constrained by the structure."
Researchers, consultants, and executives note that this benefit can be even more pronounced in today's business world, which has seen dramatic changes in operating philosophies and management direction over the past few decades. Indeed, corporations are increasingly implementing innovative organizational redesigns in efforts to increase their productivity. The growth in cross-functional teams and reorganizations, for example, can easily blur reporting and operational relationships between various segments of a business. It is important, then, for businesses that do rely on organizational charts to continually examine and update those diagrams to ensure that they reflect current business realities. In fact, the changes in organizational structures have spurred innovative changes in the format of many organizational charts. Whereas traditional models have been formatted along general "up-down" lines, newer models sometimes utilize flattened or "spoke" frameworks.
ORGANIZATIONAL STRUCTURE
Organizational structure depends on the product to be developed. Wheelwright and Clark define a continuum of organizational structures between two extremes, functional organizations and project organizations. Functional organizations are organized according to technological disciplines. Senior functional managers are respnsible for allocating resources. The responsibility for the total product is not allocated to a single person. Coordination occurs through rules and procedures, detailed specifications, shared traditions among engineers and meetings (ad hoc and structured). Products that need a high level of specialized knowledge require a functionally organized structure.
A light-weighted matrix organization remains functional and the level of specialization is comparable to that found in the functional mode. What is different, is the addition of a product manager who coordinates the product creation activities through liaison representatives from each function. Their main tasks are: to collect information, to solve conflicts and to facilitate achievement of overall project objectives. Their status and influence are less as compared to functional managers, because they have no direct access to working-level people.
A heavy-weighted matrix organization exists of a matrix with dominant the project structure and underlying the functional departments. The product manager has a broader responsibility. Manufacturing, marketing and concept development are included. The status and influence of the product manager, who is usually a senior, is the same or higher as compared to the functional manager. compared to functional managers, because they have no direct access to working-level people.
A project organization exists of product oriented flows: project and teams. The project members leave their functional department and devote all their time to the project. They share the same location. The professionals are less specialized and have brioader tasks, skills and responsibilities. The functional manager is responsible for the personnel development and the more detailed technology research in the functional groups.
Companies can be classified to their organizational structures. Another variable companies can be classified to is the nature of the projects undertaken. We characterize projects by the number of employees needed to perform the tasks, or workload, and the number of tasks that are fundamentally different in nature. An example of the latter aspect is PCB development and structural design.
Another way to classify organization structure is by one of the following four categories:
I. The product to be developed is comprehensible for one person. One person is likely to have all the knowledge needed to develop Manufacturing and Assembly. The development department in companies that undertake these kinds of projects are usually very small. If a company consists of more than one department, it is usually structured as a functional organization.
II. The product to be developed has a fairly low complexity, but total work is high. These kind of products are likely to be developed within one functional department. A research department may also be an example of a department in which type II projects are undertaken. Are more departments involved, then the light weighted matrix structure is preferable. Employees are involved on a full-time basis. Tasks may be performed concurrently. The sequence can be determined using the Design Structure Matrix.
III. The product to be developed consists of a lot of different elements, such as software, PCB, power supply and mechanical structure. The product is however in the engineering phase, i.e. it is clear what needs to be done to get the product into production. Various disciplines perform their own tasks. These tasks have mostly a low workload. Employees cannot work full-timee on one project. This creates a complex situation, that may be compared to a job shop situation in production logistics. Though the comparison between manufacturing and product development is not accepted by all product development managers, it may yield good results. Studying each step in the Product Development Process and fluctuations in workloads reveals ways to reduce variation and eliminate bottlenecks. It is necessary to view the Product Development Process as a process and not as a list of projects. Three important findings regarding this are:
1. Projects get done faster if the organization takes on fewer at a time.
2. Investments to relieve bottlenecks yield disproportionately large time-to-market benefits.
3. Eliminating unnecessary variation in workloads and work processes eliminates distractions and delays, thereby freeing up the organization to focus on the creative parts of the task.
Creating cross-functional concurrent engineering teams is the right way to develop products. However, the pitfall is too many project at the same time, so that key people from engineering, marketing and manufacturing work at five or more projects at once. This results in congestion. Striving to work at 100% of the product development capacity legthens product development lead times enormously. A more realistic percentage is 80%. Attention must be focused on bottlenecks, these days most commonly found at the software development side of the project.
IV. The product is complex. Total work is high. Employees can thus participate on a full-time basis. A project organization is the most appropriate organizational structure for these kind's of products.
From India, Pune
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