Course Title: Introduction to Industrial Management (Humanities III) (HSMC-501)

UNIT-1: INTRODUCTION SYSTEM

Organizational Structure:
i. Definition: An organizational structure is a system that outlines how certain activities are directed to achieve the goals
of an organization. These activities can include rules, roles, and responsibilities.
The organizational structure also determines how information flows between levels within the company. Decisions flow
from the top down in a centralized structure. Decision-making power is distributed among various levels of the
organization in a decentralized structure. Having an organizational structure in place allows companies to remain
efficient and focused.
ii. Goals of Organizational Structure:
• The company's current roles and teams
• How job functions are currently organized
• Whether the structure fosters communication and productivity
• Whether the structure encourages employee growth
• The company's strategic plan
• Feedback from employees, leadership, and other stakeholders
iii. Factors considered in formulating structure:
Organization structure is designed keeping in view the following factors:
1. Strategy:
Strategy determines a course of action to direct various organizational activities. It makes plans to co-ordinate human
and physical resources to work towards a common objective. Strategy is pre-requisite to organization structure and also
follows it. The relationship between strategy and organization structure is depicted as follows:

Strategies to diversify product lines or markets require decentralized transition as decision-making is done at wider level
and strategies for organizations working in stable environment. Where managers do not diversify their operations,
require a centralized organization.

2. Technology:
The technology for manufacturing goods and services also affects the organization stricture.
In case of mass production technology, mechanistic organization structure is more appropriate, while in case of
continuous production or small-scale production technology, the appropriate from is organic structure. This is because
mass production technologies involve standardization and specialization of work activities and continuous or unit
production technologies require low levels of standardization and specialization.
3. People:
Organization structure defines work, groups it into departments and appoints people to run those departments. People
at different jobs must possess the skill, knowledge and efficiency to accomplish the related tasks.

4. Size:
A group known as Aston Group conducted research on firms of different sizes and concluded that as firms increase in
size, the need for job specialization, standardization and decentralization also increases and organizations are structured
accordingly.

5. Environment:
Organization structure cannot ignore the effects of environment. Organizations must adapt to the environment, respond
to incremental opportunities and satisfy various external parties such as customers, suppliers, layout unions etc.

iv. Types, advantages and disadvantages of Organizational Structure:

a. Hierarchical Organizational Structure
b. Functional Organizational Structure
c. Horizontal or flat Organizational Structure
d. Divisional Organizational Structure
e. Team-based Organizational Structure
f. Network Structure

v. Advantages and disadvantages Organizational Structure:

a. Hierarchical Organizational Structure:
Advantages of the hierarchical structure include:
• Clear, defined levels of authority
• Lots of scope for progression and development
• It promotes teamwork and communication

Disadvantages of the hierarchical structure include:

• Limited collaboration between teams
• Bureaucracy that can be hard to overcome
• Limited autonomy and scope for innovation

b. Functional Organizational Structure:

Advantages of the functional structure include:
• Clearly defined roles and expectations
• Potential for lots of development in highly specialized departments
• More autonomy and scope for innovation within functional groups
Disadvantages of the functional structure include:
• Functional groups tend to exist in silos which requires careful management
• Limited collaboration and innovation between groups
• Limited communication and knowledge sharing

c. Horizontal or flat Organizational Structure:

Advantages of the flat structure include:
• A more streamlined organization with fewer middle managers
• A faster, easier decision-making process
• Employees are empowered to innovate and work more autonomously
Disadvantages of the flat structure include:
• Requires more planning and management to be effective
• Can cause confusion over who should be making what decisions
• Conflicts between employees can arise more easily

d. Divisional Organizational Structure:

Advantages of the divisional structure include:
• Divisions can operate independently to achieve their own goals
• Employees can focus more on specific products or services
• Divisional needs can be met more quickly

Disadvantages of the divisional structure include:

• Potential for duplicated resources (e.g., multiple HR teams)
• Decentralized and more independent decision-making
• More difficult to align divisions with core organizational goals

e. Team-based Organizational Structure:

Advantages of the team-based structure include:
• Prioritizes flexibility and responsiveness
• Recognizes the value of experience more than authority or seniority
• Less need for direct management as it promotes employee accountability

Disadvantages of the team-based structure include:

• May potentially lead to role ambiguity
• May lead to unclear career progression paths
• Requires effective inter-team coordination

f. Network Structure:
Advantages of network structure include:
• Quickly adapts to market changes and allows for innovative practices.
• Lowers operational costs by outsourcing non-core functions.
• Taps into specialized skills and global talent networks.

Disadvantages of network structure include:

• Limited oversight over external partners and quality assurance.
• Managing multiple relationships can lead to miscommunication.
• Increased vulnerability to data breaches and IP theft.

vi. Division of Labor:

Concept:
Division of labor is the separation of a work process into multiple tasks, with each task carried out by a different person
or group of people. Division of labor takes place mostly in systems of mass production, since it limits unnecessary
movements and reduces the handling of various tools and parts. The primary reason for division of labor
is specialization. When a complex work process is broken down into simpler, manageable tasks, efficiency is generated
in the process, as workers develop competency in the specific tasks to which they are assigned. In the long run, when
division of labor is applied within a company, productivity increases, which in turn increases profits. Put simply, division
of labor means the simplification of work. The division of tasks is a way of reducing individual workloads, which results
in jobs that can be handled more easily.
Importance of division of labor:
a. Increased productivity
When workers specialize in a single task, they can become experts and improve their production times. This can lead to
a significant increase in output, even if the workers are not expert artisans.

b. Collaboration
When workers with different specialties work together on a project, they can combine their skills and knowledge to
create a stronger final product.

c. Efficiency
When workers are focused on one task, they don't have to waste time finding materials, preparing equipment, or moving
around.

d. Innovation
As workers specialize in their tasks, they can learn new skills and improve their dexterity. They can also innovate with
tool design and use.

Scalar & Functional processes:

Scalar process: This process establishes a chain of command from the highest levels of management down. It's based
on the idea that each level of management should only communicate with the levels above and below them.
Functional process: This process involves dividing an organization into specialized departments and then regrouping
them into compatible units.
Span of Control:
The span of control in management refers to the number of people one man can supervise. This affects the effectiveness
of directions given and work done by each member within an organisation. In addition, a narrow span ensures fewer
people answer directly to the manager, and responses are quicker, but decisions take longer. On the other hand, a broader
range means that more people are under one manager’s authority. Broader is better for efficiency; perhaps less close
supervision? Like the circus act, if there are too few people around, they will be micromanaged, yet things may get out
of hand with too many. Other factors, such as the nature of the work itself and organisational structure, plus managerial
ability determine the ideal span. It boils down to supervising a workable number of people without feeling overstressed.
Delegation of authority:
It is simply means assigning tasks or responsibilities to another person and giving them the right to perform those tasks
autonomously.
In business, delegation of authorities refers to a formal organisational process that allows staff in managerial roles to
transfer their duties among their subordinates and lower-level employees. The main purpose of delegating authority is
therefore to ensure a smooth and effective business operation.
Generally, the process involves the following 3 key elements:
a. Responsibility – Assigning tasks or sharing responsibilities with an individual. Managers delegate
responsibilities to their subordinates. However, whilst the responsibility is shared, it’s not completely
transferable – managers remain responsible for the execution of the task and are accountable in the case of a
performance failure to their seniors.
b. Authority – Responsibilities usually come with a certain level of authority. Simply put, authority is the power
to make decisions. To fulfil their responsibilities, employees need to have the right level of authority so they
can perform independently and efficiently. Other than in small companies, it’s impossible for the board Director
to do this all themselves, and to ensure good governance you would want each Director to be empowered to do
everything.
 c. Accountability – As mentioned earlier, accountability is non-transferable so, in case of task failure, managers
remain responsible. So, accountability involves the process of making sure that delegated authorities are
assigned appropriately.
What is Centralization?
Centralization refers to the concentration of authority at the top level of the organisation. It is the systematic and
consistent reservation of authority at the central points within an organisation. In a centralized organisation, managers
at the lower level have a limited role in decision-making. They just have to execute the orders and decisions of the top
level.
What is Decentralization?
Decentralization means the dispersal of authority throughout the organisation. It refers to a systematic effort to delegate
to the lowest levels all authority except which can be exercised at central points. It is the distribution of authority
throughout the organisation. In a decentralized organisation, the authority of major decisions is vested with the top
management and balance authority is delegated to the middle and lower levels.

Difference between Centralized and Decentralized Organizational Structure:

Organizational Culture:
Organizational culture is the set of values, beliefs, attitudes, systems, and rules that outline and influence employee
behavior within an organization. The culture reflects how employees, customers, vendors, and stakeholders experience
the organization and its brand.

Organizational climate:
It refers to an employee’s long-lasting perception of the working environment and culture of the business they work for.
You can think of climate as similar to personality: every person has a unique personality, and every organization has a
unique climate. This is reflected as a set of characteristics and features perceived by employees. These influence
employees’ behavior at work across various dimensions such as relationships, autonomy, and organizational structure.

Difference between Organizational Culture and Climate:

Morale Definition

Morale:
Understanding 'Morale' is essential in any group or organizational context. Morale refers to the collective attitude,
overall satisfaction, and emotional outlook of a group, be it a team, community, or an entire organization. It includes
factors such as collective spirit, enthusiasm, and the level of dedication members feel towards their group's goals or
objectives. High morale in any group is usually marked by optimism, a strong sense of purpose, and a positive
environment. In contrast, low morale can result in disengagement and lower effectiveness. Recognizing and enhancing
morale is key to fostering a productive and harmonious environment, whether in sports, community projects, or business
teams.

5 Factors Affecting Employee Morale:

a. Leadership

b. Communication

c. Reward & Recognition

d. Work-Life Integration

e. The Nature of Work in Relation to Your Organization

Relationship between morale and productivity:
Morale Productivity Matrix
Morale Productivity Matrix is a tool that organizations can use to assess the relationship between morale and
productivity within their teams or departments. It involves plotting employee morale and productivity levels on a two-
dimensional graph to identify patterns and trends. This matrix is divided into four quadrants:

• High morale, high productivity: This quadrant represents the ideal situation where employees have high
morale and high productivity levels. Organizations should strive to maintain this quadrant by continuing to
invest in employee engagement and motivation.
• High morale, low productivity: This quadrant represents a situation where employees have high morale but
low productivity levels. This could indicate a lack of resources, unclear expectations, or other barriers that are
preventing employees from being productive. Organizations should assess the reasons behind this and take steps
to address any issues.
• Low morale, high productivity: This quadrant represents a situation where employees have low morale but
high productivity levels. This could indicate that employees are overworked, underappreciated, or lacking in
opportunities for growth and development. Organizations should work to address these issues and improve
employee morale.
• Low morale, low productivity: This quadrant represents a situation where employees have low morale and
low productivity levels. This could indicate serious issues within the organization, such as poor leadership, lack
of resources, or a toxic work environment. Organizations should take urgent action to address these issues and
improve the situation.

Job satisfaction:
Definition: Job satisfaction is a measure of an employee's contentedness with their job, the feeling of enjoyment or
fulfilment that a person derives from their job. It is measured in behavioural, cognitive and affective components. Job
satisfaction can be separated into two ideas: intrinsic job satisfaction and extrinsic job satisfaction. Intrinsic job
satisfaction focuses on what kind of work is being done, the tasks and duties that make up the job. Extrinsic job
satisfaction focuses on work conditions, such as the environment, supervisor, pay and coworkers.

Several key factors play distinct roles in shaping job satisfaction, directly impacting how employees perceive and value
their work. They are:
a. Environment and Workplace Relationships
b. Career Growth Opportunities
c. A Fair and Competitive Salary
d. Recognition and Rewards
e. Work-Life Balance
f. Leadership and Management Style
g. Job Security
h. A Reasonable Workload

Important Provisions of Factory Act and Labor Laws:

The Factories Act, 1948, regulates the hours of work and minimum wages:
This act mandates the payment of minimum wages to the workers by prescribing a fixed pay rate. An employer shall
pay their employees at least the prescribed minimum wage rate. If an employee is paid less than minimum wage, the
employer should pay that employee at least what the law requires. This Act reminds employers that any failure on their
part to comply with its provisions will have serious legal consequences.
The Act requires employers to allow a weekly holiday to their workers. It further makes it obligatory for the employer
to provide proper sanitary facilities and a clean potable water supply in the factory or workplace. Strict action will be
taken against the employer if they fail in providing these facilities to the workers.
Employers are also required to set up first aid boxes in their factory, store first aid records, and ensure proper
arrangements for transporting injured workers to a hospital or in-house medical facilities.
Apart from these, the Act has several relevant provisions defining the duty of an employer who has in-house medical
facilities and the duty of a doctor who is an official medical officer at the factory. The Act also defines the procedure to
be followed if a complaint of any kind is received by or made to the government’s labour department.

Important Provisions Of labour laws:

a. Improves industrial relation i.e. employee-employer relations and minimizes industrial disputes.
b. Protects workers from exploitation by the employers or management
c. Helps workers in getting fair wages
d. Minimizes labour unrest
e. Reduces conflicts and strikes etc.
f. Ensures job security for workers
g. Promotes favourable environment conditions in the industrial system
h. Fixes rest pauses and work hours etc.

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