ORGANIZATIONA
L DESIGN
Organizing
consists of grouping people and assigning activities
so that job tasks and the mission of a business can be
properly carried out
process should be an overall structure
Principles represent guidelines
Can be used exactly as the way they are
stated
other times they should be modified or even
completely ignored
Small business owners must learn
through experience when and where
to use principles or to modify them
organization decision is based on a multitude of
factors, including :
business size,
market,
product mix,
competition,
the number of employees,
history,
objectives and goals,
available financial resources.
Each small business must decide what organizational design best fits
the business.
Fundamentals of Organization
clear objectives,
coordination,
formal and informal organization,
the organization chart,
formal authority, and
centralization versus decentralization
Clear Objectives
Objectives give meaning to the businessand to
the work done by employeesby determining what it
is attempting to accomplish. Objectives provide
direction for organizing a firm, helping to identify the
work that must be done to accomplish the objectives.
This work, in turn, serves as the basis on which to
make staffing decisions.
Coordination
The resources of a small business and its employees
must be coordinated to minimize duplication and
maximize effectiveness. Coordination requires
informal communication with and among employees
every day. All businesses must continually coordinate
the activities of othersan effort that should never be
underestimated.
six fundamental questions:
What is my job?
How am I doing?
Does anyone care?
How are we doing?
What are our vision, mission, and values?
How can I help?
Formal organisational structure
clearly spells out the job to be performed by
each individual, the authority, responsibility
assigned to every individual, the superior-
subordinate relationship and the designation of
every individual in the organisation. This
structure is created intentionally by the
managers for achievement of organisational
goal.
Features of Formal organisation:
(1) The formal organisational structure is created intentionally
by the process of organising.
(2) The purpose of formal organisation structure is achievement
of organisational goal.
(3) In formal organisational structure each individual is assigned
a specific job.
(4) In formal organisation every individual is assigned a fixed
authority or decision-making power.
(5) Formal organisational structure results in creation of
superior-subordinate relations.
(6) Formal organisational structure creates a scalar chain of
communication in the organisation.
advantages
Systematic Working:
Achievement of Organisational Objectives:
No Overlapping of Work:
Co-ordination:
Creation of Chain of Command:
More Emphasis on Work:
disadvantages
Delay in Action:
Ignores Social Needs of Employees:
Emphasis on Work Only:
Informal Organisation:
The informal organisational structure gets created
automatically and the main purpose of such structure is
getting psychological satisfaction. The existence of informal
structure depends upon the formal structure because people
working at different job positions interact with each other to
form informal structure and the job positions are created in
formal structure. So, if there is no formal structure, there will
be no job position, there will be no people working at job
positions and there will be no informal structure.
Features of informal organisation:
(1) Informal organisational structure gets created automatically
without any intended efforts of managers.
(2) Informal organisational structure is formed by the
employees to get psychological satisfaction.
(3) Informal organisational structure does not follow any fixed
path of flow of authority or communication.
(4) Source of information cannot be known under informal
structure as any person can communicate with anyone in the
organisation.
(5) The existence of informal organisational structure depends
on the formal organisation structure.
Advantages of Informal Organisation:
Fast Communication:
Fulfills Social Needs
Correct Feedback:
Disadvantages of Informal organisation:
Spread Rumours:
No Systematic Working:
May Bring Negative Results:
More Emphasis to Individual Interest: