ORGANISATION DESIGN
By Sreera,
Strategy , size, technology ,and environment were the major factors influencing
the structural design an organization has. Environment of course would include differences across national cultures .
In a country with a larger power distance rating ,people prefer that decisions be centralized .Similarly ,uncertainty avoidance characteristics relate to
formalization. High uncertainty avoidance relates to high formalization. Based on these relationships we find certain patterns. The French and Italians tend to create rigid bureaucracies high in both centralization and formalization In India preference is given to centralization and low formalization. Germans prefer formalization with decentralization .
Cultural differences might also be used to predict the acceptance or rejection of innovative structural designs. For instance the matrix dual command structure requires greater tolerance for ambiguity ,so culture high in uncertainty avoidance characteristics may be less receptive to this structural design.
The way a total organization works depends in part on the design to its various parts. Naturally we want each department and section to be strong and dependable but there is also need to balance .An outstanding research division can wreck a company if it creates new products faster than the finance department can find money to pay to both research and product development .Similarly an overabundance of excellent staff advice on managerial development can create company with :all chief and no Indians”. As we place departments and managerial work in a total structure then we should consider the design and balance that is most needed by a specific company in its current setting.
An enterprise should usually establish as separate , major department those activities that are most likely to affect its success. Normally the heads of these departments should report directly to the chief executive so that he can be in close touch with crucial activities.
What work is designed will depend of course on the nature of the industry and the way a particular firm seeks to be distinctive Some departmental stores for
Example which believe that advertising is a primary key to success are likely to set up a separate advertising department that report directly to the president .On the other hand a company that sells
industrial supplies and raw material ,a business in which advertising is much less important will probably handle the function as a service division within its sale department Developing new and efficient products is vital to the success of any manufacturer of Industrial equipment. Product development is so important in the chemical and pharmaceutical business that some firms in these industries have both research and engineering department that report directly to president .In contrast a company that is principally concerned with processing established products--- such as dairy or a textile mill—almost always relegates engineering to a subordinate role in the production department,.
To discover how to design a department deserves in an organization structure we cannot simply count the number of employee or dollar volume of its transactions.
The strategic importance of a department function ,product or a area may shift with the passage of time A clear illustration of this point is the changing status of Industrial relations .Prior to the increase of union power that accompanied New Deal legislation , industrial relation and personnel matters in most of firms were handled by a subordinate unit in the department with largest number of employees But in 1950s more and more companies increased their emphasis on personnel and industrial relation work and following the shift many have appointed a vice-president in charge of the personnel and industrial relation who reports directly to the chief executive. Chemical production in the oil industry ,group life and pension plans in insurance companies and teleevision in former radio broadcasting companies are other example of activities that have similarly risen in strategic importance and hence in organizational status
V.Sree Rama Rao, B.E.,M.I.E.,MIMA has put on 34 years in leasing Indian Corporates in Techno-Commercial areas and retired recently as General Manager. He is a practicing Chartered Engineer and a Business Consultant specialized in the areas of Materials Management Imports, HR and General Management.. He can be contacted on e-mail vsramarao1@rediffmail.com
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