 Today's session is on organization development and change and specifically looking at restructuring organization. You must have seen so many organizations which are of very large sizes. They have operations across the world. You might have heard about the organizations which have operations or factories in dozens of countries and they might be marketing their products in again in 40, 50, 60 or 80 countries. So, you might have thought about how these organizations are designed, how the structure of these organizations is decided and if required we have to change the structure, what is the science behind it, how what are the things to be taken to be taken care of when we restructure any organization. Today's in this session our learning objectives are to understand the basic principles of techno structural design. What are the basic principles based on which structures are based? Then we understand the three basic structural choices and two advanced structural choices available to organizations. There are different types of structures possible. They can be classified in certain way. We are going to discuss those. Generally organizations particularly established organizations do not have one form of a structure. They generally have a combination of this structure which we are going to discuss. Then we will aim at understanding the process of downsizing and re-engineering and these are the major change initiatives being taken up by organizations time to time. Why the organization structure have to be changed? So, we must understand that a structural design of organization is influenced by so many factors environmental factors, worldwide operations, organizational goals, technology and organization design. These are the factors because of which organizations have to question how organizations have to modify their structural designs. Environment can keep changing. We have seen from a localized trades and businesses to global business operations. This was a major change in the economic environment. Similarly, political environment can change or other regulatory international trade related environment can change and because of which organizations might have to change their structure. When operations grow worldwide for any organization, they realize that in different parts of the world different rules and regulations apply, different type of conditions they have to they need to deal with and different nature of stakeholders they have to interact with. In order to facilitate the smooth process, organizations when their operations are reached to the global level, they need to modify their design which is suitable to the area of their operations. At times organizations goals also change. At one point of time, organization might be aiming at marketing one type of product. At another point of time, organization may decide to look at different type of product design, different kind of offerings. In light of those needs, many a time organization design also has to be changed. Another factor is technology. Technology is proving to be one of the strongest factor affecting the organization design. Thanks to the IT, thanks to many revolutions in the telecommunication and internet related discoveries, new and new business models are coming up. As new business models are coming up, organization design also have to be changed and that is how the different types of designs of organizations are emerging in last 10 years. Many a time organization design has to be changed just because of the sheer size of the organization. When the operations grow, when the number of department increase, when the hierarchical levels increase, at times it is necessary to review and redesign the hierarchical levels or the departmental differentiation within the organization. So, size itself can be cause for the change in organization design. Garrett Jones have studied numerous organizations and identified the four basic challenges of organization design. These challenges can be understood by looking at certain conditions in organizations. So, this is example number one. When people in this organization take on new task as the need arises and it is very unclear who is responsible for what and who is supposed to report to whom. This makes it difficult to know on whom to call when the need arises and difficult to coordinate people's activities. So, they work together as a team. Now, this is a kind of a situation. This is difficult situation, but this is not a rare situation. Many a time you might have experienced this situation in the organization you are working or in the organization you might have visited as customer. So, this is the first type of organization design challenge and this challenge is about differentiation of the vertical and horizontal challenges establishing the controlling division of labor or degree of specialization. In the simple term it means this is the challenge about differentiation. Differentiation in the organization design happens in two ways. Hierarchical level differentiation means responsibility of one layer of hierarchy is different from the next level of hierarchy. So, how many hierarchical levels need to be created that is always important question to design an effective organization. Similarly, there is a differentiation also occurs the challenge about the differentiation also occurs. Decision about differentiation also need to be made about the departments of the organization which is called the horizontal level differentiation. That simply means how many departments an organization can create. You might have seen some organizations starting with a simple operations operation at a lowest scale and then they keep growing. If you can take example of a restaurant in your neighborhood initially they may start with simply two functions of front desk function and service function and kitchen function. But as the restaurant size increases as the number of customers increase they can differentiate different functions like they can introduce a purchase function, front desk function, service function, marketing function, customer relations function, kitchen functions and kitchen functions can also be further differentiated. So, organizations have to keep creating different departments and that is called the differentiation at the horizontal level. But organizations cannot keep on creating new departments because when we create new and new departments these departments at time develop a barrier in the communication and coordinate functioning. So, that is always a challenge to decide how many departments should be created in the organization and that is the summary of the first challenge of organization design. In nutshell, the first challenge basic challenge of organization design is about how many hierarchical levels can be created and how many departments can be created. Now there is a another situation suppose you are working in an organization or you come across in an organization where we cannot get people to communicate and coordinate in that organization. Specifying tasks and roles is supposed to help coordinate the work process, but there is there it builds barriers between people and function. When we face this kind of situation we know that basically we are facing the second challenge of organization design that is balancing differentiation versus integration. You may keep creating differentiation at vertical and horizontal level and after a while people may not be communicating very well amongst themselves across the hierarchy or across the department that is the second challenge of organization design. Then there is another situation and this is a situation where people in the organization do not take responsibility or risk they are always looking to the boss for the direction and supervision. As a result decision making is slow and organization miss out on the lot of opportunities to create value for themselves and for the customers. What you infer? What challenge this situation is indicating? So this challenge is about balancing of centralization and decentralization meaning to what extent authority should be centralized to what extent the decision making should be centralized and to what extent authority is delegated to the people at the front line level or people at the lower level of hierarchy. You can have an organization where most of the decisions are centralized that has its challenges. We can also have an organization where decisions are decentralized to a great extent and as a result of that people use their autonomy in a indiscriminate manner. So what is the right balance of centralization and decentralization that becomes the third basic challenge of organization design. Now we will look at the fourth situation. This is example of a fourth situation where people in the organization pay too much attention to the rules. Whenever I need somebody to satisfy as unusual customer request or need real quick service from another function I cannot get it because no one is willing to bend or break the rule. People are so bound by the rules and regulation that they are not able to cater the need of an unusual customer even if the customer demand is very genuine. These kind of challenges are about balancing standardization and mutual adjustment. To run an organization we decide on the processes and systems. To run an organization we decide how a task can be performed. After making certain norms we make the rules around these norms to ensure that a particular task takes place in certain way or a particular type of decision is made in certain specific way. That is the process we call standardization. But many a time because of standardization the flexibility in the organization is no more. Because of the standardization people cannot have the advantage of flexible decision making. Flexibility in deciding upon unusual customer request deciding upon look working on the unforeseen opportunity or sometime even they are unable to decide upon unforeseen crisis. So this is the fourth type of challenge where organizations have to balance the standardization and mutual adjustment. Management of change expert we need to know that what are the nature of interventions required or suggested for the different design challenges. So we will look at different challenges and how to tackle these design challenges. Before we talk about the specific design challenges and how these design challenges can be addressed we must know that in an organization it is important to ensure the unity of command meaning specifically telling who will be having authority on whom, who will be reporting to whom. Second organizations must maintain the optimum optimal span of control span of control simply meaning how many people are reporting to one person in an organization. Span of control must be optimal that means not so many people should be reporting to one person and not too few people should be reporting to a manager. When job is very specialized when job requires high level of expertise then this span of control has to be low that means in a complex task environment lesser number of people should be reporting to a manager. But when task is routine when task is not complex but simple then in that situation span of control can be larger that means more number of people can be reporting to a single manager. And last but not the least communication communication communication this is the very important aspect of ensuring to handle the challenges of organization design whether it is challenge of this structure or whether it is challenge of culture. People have to be constantly communicated about why a decision is made what are their what are the expected behavior what are the goals of an organization what are the intention of management when they make certain choice or a make important decision. So communication play a very important role in handling these design challenges. Now we look at these four design challenges and how specifically these challenges can be handled. So vertical and horizontal differentiation and challenge related to that can be addressed by checking and revising the job description in view of real life experience and organization design before recruitment. So before recruitment itself we have to have clarity about what is required to be done by this person who hold that particular position and in that way we can think about more clearly how many hierarchical levels and how many department or horizontal differentiation is required. Let us talk about the second challenge the second challenge is about balancing differentiation versus integration. In our organization we create differentiation by creating the number of hierarchy and by creating the different departments. This differentiation should not result in fragmentation. This differentiation should not result in silo functioning of the different functions and people who are associated with that function those functions. The need is to have the integration even if differentiation is required. Now the question is what is the mechanism through which we ensure that there is an integration and not the fragmentation when differentiation is created in the organization as per the hierarchy or as per the function. So what is required is to identify the integration mechanism by creating communication opportunities and integration roles. What does this mean? That simply means when we have larger number of hierarchy or larger number of horizontal differentiation or what we call departments then we need to create more and more opportunity where people can interact with each other. People from different hierarchical level or people from different functions or departments should get more opportunity and that opportunity has to be creatively identified and provided to the people so that there are lot of channels of communication amongst the people there is one and secondly there can be some integration roles which can be created to ensure that differentiation across the hierarchy or across the function does not result in fragmentation. What are those integration roles? Those integration roles are about interacting with the two departments for example a market research department can interact with the branding, marketing and sales department a quality department has to interact with the design department as well as production department. Similarly across the functions where we see there are silo working has started or people are not interacting enough we can create some integration role which are and the people holding those roles would be responsible to ensure that they connect these two departments. Many a time integration becomes such a challenge that we have to create even integration department when organization is huge we need to create the integration department which are aimed at connecting different functions or ensuring the communication amongst different levels of hierarchy. Third challenge was about balancing centralization and decentralization. How much authority can be wasted in one person at certain level of hierarchy and how much authority and how to what extent authority is centralized and to what extent authority is decentralized or given to the people down the line. So, how it can be how this challenge can be handled? This challenge can be handled by defining and regularly reviewing the processes because as the market changes as the operations change changes there can be different or more or less processes might be required to be performed within an organization. In that situation a formal processes or process map may not be relevant. To make the process and process maps and procedures relevant organizations had to regularly review those processes. Secondly organizations can identify the core and peripheral routines or jobs. A simple rule of thumb about balancing centralization and decentralization is that the core functions can remain centralized because the control is better and control is more with the centralized function and the non-core function can be delegated more quickly more easily and they have to be customized according to the specific context where they are being performed. So, this is a rule of thumb this is not a something which can be applied anywhere and everywhere in any specific situation, but centralization and decentralization can be managed by identifying the core activities and the peripheral activities. Core activities can be centralized and peripheral activities can be decentralized. Third way of balancing the centralization and decentralization is automation and balancing the delegation and development. Many processes many peripheral processes can be automated if they are automated in a way they are centralized. With the help of technology many functions are now getting automated and that free up the manpower to cater the local needs of the market or to connect with the local customers. One important thing is decentralization must be followed by development that means we cannot delegate even if the work is peripheral without proper development of the people whom we are going to delegate the function or delegate the authority or delegate the decision making power we should not do it without proper training and development of those people. Before any delegation proper inputs about the function should be given and they must be developed to hold that responsibility. Our fourth challenge about organization design was the challenge of balancing standardization and mutual adjustment. This challenge can be addressed by having optimum use of norms rules and SOPs. Standardization is required but we cannot deny the contingencies in terms of the environment change in terms of the customer specification or arrival of an unusual customer demand. In those situations organization should be having the flexibility to address the situation. If the norms are very stringent people in the organization employees of the organization and managers of the organization will not be able to address the customer's expectation or they cannot address quickly the unforeseen competition emerged in the market. So, norms have to be flexible enough to for people to address the unforeseen situation emerging in the market but at the same time they should be strong enough for people to understand those and follow those because it is only through the proper norms and rules and regulation the quality can be maintained and the ethical working can be ensured. So, we need to specifically identify what is non-negotiable in the organization what in terms of the ethical and integrity policy which is non-negotiable. So, that bottom line must be clarified and any mutual adjustment can be only done after following the non-negotiable norms about integrity ethics and standard. So, these are the general interventions to address these different design challenges which we talked about.