New Design Options – Organisation Structure

Managers have been experimenting with various design options to compete effectively.

The term team structure refers to the use of teams as a central device to coordinate work activities. The bureaucratic structure is not suitable for most of today’s dynamic organizations. Employees with diverse skills and experience are required to work together (as teams) to successfully complete projects. As such traditional work areas have given way to more of a team effort, building and capitalizing on the various skills and backgrounds that each member brings to the team. Team members have a responsibility, purpose and establish specific goals and have the leadership and structure to provide focus and direction. They are held responsible – individually and jointly for results. They rely on each other and develop healthy  interpersonal relations based on trust. They exchange information, resources, feelings and thoughts freely and openly. The point is that teams do go beyond  traditional formal work groups by having a collective effect. The basis of these work teams, then is driven by the tasks at hand. Involving employees gives them an opportunity to focus on the job goals. The freedom that they enjoy empowers them to develop the means to achieve  the desired ends.

The virtual organization is a small core organization that outsources major business functions. Dell computer, for instance owns no plants and merely assembles computers  from outsourced parts. The core functions generally reflect the strength of the virtual organization. It can be designing, marketing, distribution etc. The core group consists of a small group of executives overseeing activities that are undertaken in-house and coordinating relationships with outside organizations that carry out work on behalf of the virtual organization. Most of the time the executives spend  in developing and coordinating links with outside suppliers through computer networks. The major advantages of the virtual structure is its flexibility. For instance it allows someone with an innovative idea and little money like Dell Computer – to successfully compete with giant outfits such as IBM.

The Boundary less organization is an organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams. In a boundary less organization the vertical lines of hierarchy are eliminated . The pyramidal shape is decimated and a flat organization structure takes its place. Functional departments are replaced by cross functional teams. A cross functional team consists of employees from the same hierarchical level but from different work areas, who come together to accomplish a task. The attempt is to turn every employee into a kind of a generalist by putting him in various teams to improve his skills, experience and ability to get along with others. To this end, the organization rotates people into and out of different functional areas. Lateral transfers are also routinely carried out.

Factors influencing organization structure:

There is no particular type of organization structure that is best suited for all enterprises. Even two firms competing in the same industry with a similar set of products, technologies and markets, may find that a structure that works for one firm may need some modification in another. The issue depends on several contingency factors such as size,  technology, environment , people etc.

There is considerable evidence that an organization’s size has a significant influence on its structure. As an organization adds more employees there is more specialization and horizontal differentiation. To facilitate coordination more managers are needed. This increases vertical differentiation. The increase in complexity makes it more difficult for top management to directly oversee what is going on throughout the organization. Direct surveillance therefore is, supplemented by formalized rules and regulations. Finally, with top management further removed from the operating level, it makes it increasingly difficult for senior executives to makes rapid and informative decisions. Decision making is likely to become more decentralized.

Technology is another important aspect in the design of organization structure. To achieve satisfactory performance, managers must design an organization with the proper mix of technology, structure and human behaviour. Technology, in simple terms is the organization’s transformation process. It is the combination of skills, equipment and relevant technical knowledge needed to bring about desired transformation in materials, information and people. Technology looks at how the inputs are transferred to outputs. Broadly, speaking it is the application of knowledge to perform work.

The type of technology in the organization influences the type of organization structure that should be used. If the type of structure fits the type of technology, the organization will be more successful.

Different departments and divisions of the organization use different  technologies. Therefore the structure of these sub units should vary, depending upon the type of technology they employ. Not all sub-units have to be structured similarly.

Different types of coordination and control systems are appropriate for different types of technology. In short, organizational technology mellows down the relationship between organization design and organizational effectiveness.

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  • Thakkarashish180

    Nice one ……..

  • Hklrao

    Indeed yet another good article from Rao, beneficial to HR Managers ; Also please read and share the following:

    It was  1974 April ( I
    was with  MFL Madras) when  I was attending the  one week Management
    Development Program (MDP)conducted by IIM- Calcutta at Darjeling , on 
    Marketing Research & MIS that I casually met Dev Anand  at the lawns
    of  Hotel  Oberio(  hope, i remember the name of Hotel Correctly) ,
    Darjeeling  while Dev Anand  was relaxing and reading news paper all
    alone and taking sunbath.He had  come  to Darjeeling  for  film shooting
    , stayed in the same hotel  and that was a rest day.Our  IIM  sessions
    was to start at 11 am and the expected faculty Prof. Lakshmi Mohan  of
    IIM Calcutta who was to handle the topic on Marketing Research could not
    turn up as the flight from Calcutta was canceled due to heavy fog. The
    Coordinator of the Program form IIM cal ( late) Prof. Ramaswamy P. Iyer 
    ( he was later Director of IFMR Chennai)was agitated.All the 22
    participants of the program were waiting at the hotel  for the program
    to start.Prof. Ramaswamy expressed to me  of his embarrassment: to
    the sessions.I took courage and walked to Dev Anand and got intoduced
    to him and had an half an hour interesting talk on the film world and
    marketing aspects in the film Industry including the viewers
    expectations etc. Dev was nostolgic of Madras Idli, Wada, Coffee , beach
    and  melodious music and  home of MS. He had quickly  composed a poem 
    of our meeting and his handling a session in English and read in the
    class.Such a simple and unassuming.ever young man he was
    I   told  Dev Anand
    that we were  here for IIM-C  Program on Marketing Research & MIS
    and the assigned faculty to handle that day’s sessions Prof.Mohan  could
    not turn up from Calcutta due to flight cancellation for dense fog.I
    dared to request him to engage us by  handling  a  session  on Marketing
    Research and MIS in the film Industry and be our “Guide”. After some
    initial hesitation  to engage us, Dev Anand got excited on this Idea
    and  agreed to the challenge of handling a management class for us .He 
    me give him  a few general tips about the topic  & sought  some
    Clarifications , to get himself  adequately 
    prepared for  his one hour  talk . He jotted down the few points that I
    gave him. The Program was also held in the same hotel where we were
    staying and he was also staying . I rushed to prof. Iyer and told him
    that I approached  Dev Ananad  as a subtute   and   he was willing to
    handle the session   instead of Prof Lakshni Mohan who could not turn
    up.There was lot of relief  for  the stressed  Prof. Iyer and a beam an
    his  face that Dev. Anand would handle session & the assigned  
    topic  and there was no need to cancel the session. He  ran to profusely

    thank  Dev who had  just returned to his suite for preparing for talk
    and Prof. Iyer  invited him for addressing the participants.
    The Dev’s  talk was
    arranged  during 3 to 5 pm .It was indeed amazing that he gave such a
    wonderful  interesting  and relevant talk on Marketing Research &
    MIS covering concepts and live cases from the film Industry for over two
    hours with Q&A .We took a group photo with him . It was indeed a
    memorable encounter with Dev Anand which happened some 40 years ago of
    the ever green hero of the Film world.
    It was indeed a memorable day.
    My memories  even after 4 decades  are still Green of the evergreen
    hero. We miss him for ever!!
    May Dev’s soul rest
    in peace!! Dr.H.K.LakshmanRao,
    33, Krishnapuri, Chennai 600028, Mobole 09381036989


  • Karthikeyan

    Thanks for sharing this wonderful experience