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SUMMARY ON MBA 823

COURSE CODE:
MBA 823

COURSE TITLE:
ORGANISATIONAL
DESIGN
 Module 1
Table of Contents Unit 1 Definition of organizational structure

MAIN CONTENT

An organizational structure defines how activities such as task allocation, coordination and
supervision are directed towards the achievement of organizational aims. It can also be
considered as the viewing glass or perspective through which individuals see their organization
and its environment.

Organizations are a variant of clustered entities.

An organization can be structured in many different ways, depending on their objectives. The
structure of an organization will determine the modes in which it operates and performs.

HISTORY
Organizational structures developed from the ancient times of hunters and collectors in
tribal organizations through highly royal and clerical power structures to industrial
structures and today's post-industrial structures.

As pointed out by L. B. Mohr, the early theorists of organizational structure, Taylor, Fayol, and
Weber "saw the importance of structure for effectiveness and efficiency and assumed without
the slightest question that whatever structure was needed, people could fashion accordingly.
Organizational structure was considered a matter of choice.. When in the 1930s, the rebellion
began that came to be known as human relations theory, there was still not a denial of the idea
of structure as an artifact, but rather an advocacy of the creation of a different sort of structure,
one in which the needs, knowledge, and opinions of employees might be given greater
recognition."

OPERATIONAL ORGANIZATIONS AND INFORMAL ORGANIZATIONS

See also: Informal organization and Formal organization

The set organizational structure may not coincide with facts, evolving in operational action.
Such divergence decreases performance, when growing. E.g., a wrong organizational structure
may hamper cooperation and thus hinder the completion of orders in due time and within
limits of resources and budgets. Organizational structures shall be adaptive to process
requirements, aiming to optimize the ratio of effort and input to output.

TYPES
Pre-bureaucratic structures

Pre-bureaucratic (entrepreneurial) structures lack standardization of tasks. This structure is most

common in smaller organizations and is best used to solve simple tasks. The structure is totally
centralized. The strategic leader makes all key decisions and most communication is done by
one on one conversations.
Bureaucratic structures
Weber (1948, p. 214) gives the analogy that “the fully developed bureaucratic mechanism
compares with other organizations exactly as does the machine compare with the
nonmechanical modes of production. Precision, speed, unambiguity, strict subordination,
reduction of friction and of material and personal costs- these are raised to the optimum point in
the strictly bureaucratic administration.” Bureaucratic structures have a certain degree of
standardization.
The characteristics of bureaucracy are:

• Clear defined roles and responsibilities

• A hierarchical structure
• Respect for merit

Post-bureaucratic
The term of post bureaucratic is used in two senses in the organizational literature: one generic
and one much more specific. In the generic sense the term post bureaucratic is often used to
describe a range of ideas developed since the 1980s that specifically contrast themselves with
Weber's ideal type bureaucracy. This may include total quality management, culture
management and matrix management , amongst others. None of these however has left behind
the core tenets of Bureaucracy. Hierarchies still exist, authority is still Weber's rational, legal
type, and the organization is still rule bound.
Functional structure

A functional organizational structure is a structure that consists of activities such as

coordination, supervision and task allocation. The organizational structure determines how the
organization performs or operates. The term organizational structure refers to how the people in
an organization are grouped and to whom they report. One traditional way of organizing people
is by function. Some common functions within an organization include production, marketing,
human resources, and accounting.

Divisional structure

The Divisional structure or product structure is a configuration of an organization, which breaks

down the company into divisions that are self-contained. A division is self-contained and
consists of collections of functions which work to produce a product. It also utilizes a plan to
compete and operate as a separate business or profit center. According to Zainbooks.com,
divisional structure in America is seen as the second most common structure for organization
today.
Matrix structure

The matrix structure groups employees by both function and product. This structure can
combine the best of both separate structures. A matrix organization frequently uses teams of
employees to accomplish work, in order to take advantage of the strengths, as well as make up
for the weaknesses, of functional and decentralized forms. An example would be a company
that produces two products, "product a" and "product b". Using the matrix structure, this
company would organize functions within the company as follows: "product a" sales
department, "product a" customer service department, "product a" accounting, "product b" sales
department, "product b" customer service department, "product b" accounting department.
ORGANIZATIONAL CIRCLE: MOVING BACK TO FLAT

The flat structure is common in small companies (entrepreneurial start-ups, university spin
offs). As companies grow they tend to become more complex and hierarchical, which leads
to an expanded structure, with more levels and departments.

However, in rare cases, such as the examples of Valve Corporation, GitHub, Inc. and 37signals,
the organization remains very flat as it grows, eschewing middle managers.[12] All of the
aforementioned organizations operate in the field of technology, which may be significant, as
software developers are highly skilled professionals, much like lawyers. Senior lawyers also
enjoy a relatively high degree of autonomy within a typical law firm, which is typically
structured as a partnership rather than a hierarchical bureaucracy. Some other types of
professional organisations are also commonly structured as partnerships, such as accountancy
companies and GP surgeries.
Team

One of the newest organizational structures developed in the 20th century is team and the
related concept of team development or team building. In small businesses, the team structure
can define the entire organization.Teams can be both horizontal and vertical. While an
organization is constituted as a set of people who synergize individual competencies to achieve
newer dimensions, the quality of organizational structure revolves around the competencies of
teams in totality.
Network

Another modern structure is network. While business giants risk becoming too clumsy to proact
(such as), act and react efficiently, the new network organizations contract out any business
function, that can be done better or more cheaply. In essence, managers in network structures
spend most of their time coordinating and controlling external relations, usually by electronic
means.
Virtual

Virtual organization is defined as being closely coupled upstream with its suppliers and
downstream with its customers such that where one begins and the other ends means little to
those who manage the business processes within the entire organization. A special form of
boundaryless organization is virtual. Hedberg, Dahlgren, Hansson, and Olve (1999) consider
the virtual organization as not physically existing as such, but enabled by software to exist. The
virtual organization exists within a network of alliances, using the Internet. This means while
the core of the organization can be small but still the company can operate globally be a market
leader in its niche.
Hierarchy-Community Phenotype Model of Organizational Structure
Hierarchy-Community Phenotype Model of Organizational Structure
In the 21st century, even though most, if not all, organizations are not of a pure hierarchical
structure, many managers are still blind to the existence of the flat community structure within
their organizations.
The business is no longer just a place where people come to work. For most of the employees,
the firm confers on them that sense of belonging and identity –– the firm has become their
“village”, their community. The firm of the 21st century is not just a hierarchy which ensures
maximum efficiency and profit; it is also the community where people belong to and grow
together, where their affective and innovative needs are met.

Unit 2 Types of organizational

structure

DIFFERENT TYPES OF ORGANIZATIONAL STRUCTURE

Functional Structure
Functional structure is set up so that each portion of the organization is grouped according to its
purpose. In this type of organization, for example, there may be a marketing department, a sales
department and a production department.
Divisional Structure
Divisional structure typically is used in larger companies that operate in a wide geographic
area or that have separate smaller organizations within the umbrella group to cover different
types of products or market areas. For example, the now-defunct Tecumseh Products Company
was organized divisionally-- with a small engine division, a compressor division, a parts
division and divisions for each geographic area to handle specific needs.
Matrix
The third main type of organizational structure, called the matrix structure, is a hybrid of
divisional and functional structure. Typically used in large multinational companies, the matrix
structure allows for the benefits of functional and divisional structures to exist in one
organization.
Advantages and Disadvantages

All managers must bear that there are two organisations they must deal with-one formal and the
other informal.
-The formal organisation in usually delineated by an organisational chart and job descriptions
and the official reporting relationships are clearly known to every manager.
-Alongside the formal organisation exists are informal organisation which is a set of evolving
relationships and patterns of human interaction within an organisation that are not officially
prescribed.

Unit 3 Line Organisational Structure

LINE ORGANIZATIONAL STRUCTURE

Features of Line Organization

1. It is the simplest form of organization.

2. Line of authority flows from top to bottom.
3. Specialized and supportive services do not take place in this organization.
4. Unified control by the line officers can be maintained since they can independently
take decisions in their areas and spheres.
5. This kind of organization always helps in bringing efficiency in communication and
bringing stability to a concern.

Line Organisational Structure:

A line organisation has only direct, vertical relationships between different levels in the firm.
There is only line departments-departments directly involved in accomplishing the primary goal
of the organisation. For example, in a typical firm, line departments include production and
marketing. In a line organisation authority follows the chain of command.
Features

Has an only direct vertical relationship between different levels in the firm

Advantages:
1. Tends to simplify and clarify authority, responsibility and accountability relationships
2. Promotes fast decision making
3. Simple to understand.

Disadvantages:
1. Neglects specialists in planning
2. overloads key persons.
Staff or Functional Authority Organisational Structure

The jobs or positions in an organization can be categorized as:

(i) Line position:

a position in the direct chain of command that is responsible for the achievement of an
organization’s goals and,

(ii) Staff position:

A position intended to provide expertise, advice and support for the line positions.

The line officers or managers have the direct authority (known as line authority) to be exercised
by them to achieve the organisational goals. The staff officers or managers have staff authority
(i.e., authority to advice the line) over the line. This is also known as functional authority.
LINE AND STAFF ORGANISATIONAL STRUCTURE
Most large organisations belong to this type of organisational structure. These organisations have
direct, vertical relationships between different levels and also specialists responsible for advising
and assisting line managers. Such organisations have both line and staff departments.
Three types of specialized staffs can be identified:
(i) Advising,
(ii) Service and
(iii) Control.
Some advantages are:
(i) Even through a line and staff structure allows higher flexibility and specialization it may
create conflict between line and staff personnel.
(ii) Line managers may not like staff personnel telling them what to do and how to do it
even though they recognize the specialists’ knowledge and expertise.

Features

1. Line and staff have direct vertical relationship between different levels.
2. Staff specialists are responsible for advising and assisting line managers/officers in
specialized areas.
3. These types of specialized staff are (a) Advisory, (b) Service, (c) Control e.g.
Disadvantages and Advantages
Disadvantages
(i) Conflict between line and staff may still arise.
(ii) Staff officers may resent their lack of authority.
(iii) Co-ordination between line and staff may become difficult. Committee Organisational
Structure Features:
(a) Formed for managing certain problems/situations

(b) Are temporary decisions.

Advantages:
1. Committee decisions are better than individual decisions
2. Better interaction between committee members leads to better co-ordination of
activities
3. Committee members can be motivated to participate in group decision making.
4. Group discussion may lead to creative thinking.

Disadvantages:
1. Committees may delay decisions, consume more time and hence more expensive.
2. Group action may lead to compromise and indecision.
3. ‘Buck passing’ may result.

DIVISIONAL ORGANISATIONAL STRUCTURE

In this type of structure, the organisation can have different basis on which departments are
formed. They are:

(i) Function,
(ii) Product,
(iii) Geographic territory,
(iv) Project and
(iv) Combination approach.
PROJECT ORGANISATIONAL STRUCTURE
The line, line and staff and functional authority organisational structures facilitate
establishment and distribution of authority for vertical coordination and control rather than
horizontal relationships. In some projects (complex activity consisting of a number of
interdependent and independent activities) work process may flow horizontally, diagonally,
upwards and downwards. The direction of work flow depends on the distribution of talents
and abilities in the organisation and the need to apply them to the problem that exists. The
cope up with such situations, project organisations and matrix organisations have emerged.

Importance of Project Organisational Structure:

Project organisational structure is most valuable when:
(i) Work is defined by a specific goal and target date for completion.
(ii) Work is unique and unfamiliar to the organisation.
(iii) Work is complex having independent activities and specialized skills are necessary
for accomplishment.
(iv) Work is critical in terms of possible gains or losses.
(v)Work is not repetitive in nature.

Characteristics of project organisation:

1. Personnel are assigned to a project from the existing permanent organization and are under the
direction and control of the project manager.

2. The project manager specifies what effort is needed and when work will be performed whereas
the concerned department manager executes the work using his resources.

3. The project manager gets the needed support from production, quality control, engineering etc.
for completion of the project.

4. The authority over the project team members is shared by project manager and the
respective functional managers in the permanent organisation.
Merits of Line Organization
1. Simplest
2. Unity of Command
3. Better discipline
4. Fixed responsibility
5. Flexibility-
6. Prompt decision

Demerits of Line Organization

1. Over reliance
2. Lack of specialization
3. Inadequate communication-
4. Lack of Co-ordination-
5. Authority leadership-

Matrix Organisational Structure

MATRIX ORGANISATIONAL STRUCTURE:

What is matrix management?

It is a type of organizational management in which people with similar skills are pooled for
work assignments, resulting in more than one manager (sometimes referred to as solid line
and dotted line reports, in reference to traditional business organization charts).

The matrix for project management

A lot of the early literature on the matrix comes from the field of cross functional project
management where matrices are described as strong, medium or weak depending on the level of
power of the project manager.
Management advantages and disadvantages

Key advantages that organizations seek when introducing a matrix include:

• To break business information silos

• To deliver work across the business more effectively
• To be able to respond more flexibly
• To develop broader people capabilities

Key disadvantages of matrix organizations include:

• Mid-level management having multiple supervisors can be confusing, in that competing
agendas and emphases can pull employees in different directions, which can lower
productivity.
• Mid-level management can become frustrated with what appears to be a lack of clarity
with priorities.
• Mid-level management can become over-burdened with the diffusion of priorities.
• Supervisory management can find it more difficult to achieve results within their area
of expertise with subordinate staff being pulled in different directions.

Application: Advantages and Disadvantages in a project management situation

The advantages of a matrix for project management can include:

• Individuals can be chosen according to the needs of the project.

• The use of a project team that is dynamic and able to view problems in a different way
as specialists have been brought together in a new environment.
• Project managers are directly responsible for completing the project within a specific
deadline and budget.

The disadvantages for project management can include:

• A conflict of loyalty between line managers and project managers over the allocation
of resources.
• Projects can be difficult to monitor if teams have a lot of independence.
• Costs can be increased if more managers (i.e. project managers) are created through
the use of project teams.

In popular culture
• A great example of matrix-style management can be seen when Peter Gibbons messes up
his TPS reports in the movie Office Space

Current thinking on matrix management

In 1990 Christopher A. Bartlett and Sumantra Ghoshal writing on matrix management in the
Harvard Business Review ,[3] quoted a line manager saying “The challenge is not so much to
build a matrix structure as it is to create a matrix in the minds of our managers”. Despite this,
most academic work has focused on structure, where most practitioners seem to struggle with
the skills and behaviours needed to make matrix management a success. Most of the
disadvantages are about the way people work together, not the structure.

Visual representation
Representing matrix organizations visually has challenged managers ever since the matrix
management structure was invented. Most organizations use dotted lines to represent secondary
relationships between people, and charting software such as Visio and OrgPlus supports this
approach.
Clarification
Matrix management should not be confused with "tight matrix". Tight matrix, or co-location,
refers to locating offices for a project team in the same room, regardless of management
structure.

Feature
Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical
functional structure

Advantages:

1. Decentralised decision making.

2. Strong product/project co-ordination.
3. Improved environmental monitoring.
4. Fast response to change.
5. Flexible use of resources.
6. Efficient use of support systems.

Disadvantages:

1. High administration cost.

2. Potential confusion over authority and responsibility.
3. High prospects of conflict.
4. Overemphasis on group decision making.
5. Excessive focus on internal relations.

How the structure evolves

Most organizations evolve from functional structures within a country or other geographic
region. In this case, we have a number of functions such as manufacturing, legal, HR, sales,
marketing, IT etc. each reporting to a country or region head.

It was normal for individuals within the functions to have a single reporting line to a functional
boss right the way up to the functional director, who reported to the country head or region general
manager. The functions were often described as ‘silos’. People were recruited into a function,
developed and managed within the function, and usually saw their career development as vertically
within that function.
HYBRID ORGANISATIONAL STRUCTURE
Advantages:
1. Alignment of corporate and divisional goals.
2. Functional expertise and efficiency.
3. Adaptability and flexibility in divisions.
Disadvantages:
1. Conflicts between corporate departments and units.
2. Excessive administration overhead.
3. Slow response to exceptional situations.

Uses:

Used in organisations that face considerable environmental uncertainty that can be met through
a divisional structure and that also required functional expertise or efficiency

THE INFORMAL ORGANISATION

An informal organisation is the set of evolving relationships and patterns of human interaction
within an organisation which are not officially presented. Alongside the formal organisation, an
informal organisation structure exists which consists of informal relationships created not by
officially designated managers but by organisational members at every level. Since managers
cannot avoid these informal relationships, they must be trained to cope with it

The informal organisation has the following characteristics

(i) Its members are joined together to satisfy their personal needs (needs for affiliation,
friendship etc.)
(ii) It is continuously changing:
The informal organisation is dynamic.
(iii) It involves members from various organisational levels.
(iv) It is affected by relationship outside the firm.
(v) It has a pecking order: certain people are assigned greater importance than others by
the informal group.
BENEFITS OF INFORMAL ORGANISATION

(i) Assists in accomplishing the work faster.

(ii) Helps to remove weakness in the formal structure.
(iii) Lengthens the effective span of control.
(iv) Compensation for violations of formal organisational principles.

Disadvantages of informal organisation:

(i) May work against the purpose of formal organisation.

(ii) Reduces the degree of predictability and control.
(iii) Reduces the number of practical alternatives.
(iv) Increases the time required to complete activities.

Module 2
THE CONCEPT OF ORGANIZATION
An organization is conceptualized as a system, structure, configuration, and an association of persons
engaged in concerted activities directed to the attainment of specific objectives Iheriohanma, (2000).
Examples of organizations will include the following: Nigerian Union of Teachers (NUT), Academic
Staff Union of Universities (ASUU), Nigerian Union of Journalists (NUJ), Shell Petroleum
Development Company (SPDC), National Open University of Nigeria (NOUN), etc. All these are
kinds of organizations and social entities. A family, friendship clique, market, community etc are not
organizations. However, there are features that differentiate and distinguish organization from other
kinds of social institutions. An organization can be seen as a social unit of people structured and
managed to pursue a collective goal or need.

FEATURES OF AN ORGANISATION:
Every organization both formal and informal can be identified with these common features:
(a). Structure:- A common feature of any organization is the presence of a structure, that is the way,
in which parts are being arranged, organized and connected together.
(b). Identifiable aggregation of human beings; - Every organization is a conglomeration of people that
may be assigned or expected to perform different role(s) for the purpose of achieving the
organization goal(s).
(c). Deliberate and Conscious Creation: Every organization is a creation of conscious and deliberate
action/efforts to achieving a prior conceived agenda.
(d). Coordination of Activities: - Organizational activities are coordinated, and coordination in-turn
breeds harmony.
(e). Rationality: - Organizations are instruments designed to attain formalized/specific goals or
objectives. However, the attainments of those goals are guided by rules, constraints, directives,
jurisdiction, authority, coordination etc.
Ways in which organizations are conceptualized
(a). Open-system
(b). Composition of Constituencies
(c). Rational entities
(d). Social Contract
(e). Roles and positions as Instruments of
Domination
(f). Internal constituencies
(g). Decision Makin

Types of Organization
There are two major types of organization “Informal and Formal” organization.
According to Ekpeyong (1993), Informal organization refers to the relationship between people
in an organization that are based on personal, emotions, prejudices, attitudes and etc. This
informal organization exists within every formal organization. They develop their own practices,
values, norms and social relations as members live and work together.
On the other hand, formal organization refers to a well defined structure that bears a definite
measure of authority, responsibility and accountability. Formal organization is characterized by
large scale, complex, bureaucratic and administrative machinery.
Structure of an Organization
1. Formalization: - This emphasizes the extent/degree to which organizations rely on rules,
regulations and procedures to manage and direct behavior of members.
2. Complexity: - Complexity refers to the extent to which an organization is separated within
itself. It is the degree of specialization, division of labor, hierarchy and the degree to which the
organizational units are separated from each other.
3. Centralization: - There seems to be centralization in decision making and authority in
organizations.

Organizational Design
According to Nwachukwu (1988),
Organizational Design is a formal process of integrating people, information and technology within
an organization. The design of any organization is used to match the form/structure of the organization
with the purpose/goals which the organization intends to achieve. In addition, this will include
plan/processes in making changes in other to achieve organization objectives. From the explanation
the emphasis is on the management side of the organization.

STEPS TO BE TAKEN WHEN CONSTRUTING OR DESIGNING AN ORGANISATION:

(1). Goals and Objectives: Establish and define the goals, objectives, plans and policies of the
organization.
(2). Identify/Understand the Organizations’ Operations: this has to do with the identification of
various activities and key processes to fulfill the goals and objectives of the organization.
(3). Defining/Classification of activities: this is the identification and classification of key activities
necessary for the actualization of goals.
(4). Identify/define rules: Here rules, regulations, responsibilities, skills, knowledge, experience,
behavior, attitude etc are identified/defined for each role in the organization.
(5). Structure and Authority: the desired structure of the organization is determined and direction/flow
of authority needed for the execution/implementation of plans and policies. Again, structure and
authority are well spelt out for each individual and group.

UNIT 2 COORDINATION, CONTROL AND INFORMATION SYSTEMS

EXPLANATION OF
COORDINATION, CONTROLLING AND INFORMATION SYSTEM

Coordination
This is one of the essences of managerial functions. It entails clear definition, entails the filling of
positions as indicated in the organizational structure. This necessitates defining workforce
requirements for the job to be done. The activity also incorporates inventory, appraisal and selection
of candidates for appropriate position, compensating and training.
Controlling
Controlling is an important function an organization moves towards in achieving its objectives.
Management is defined as a process of efficient and effective utilization of resources through proper
monitoring and cocoordinating for realization of organisational goals. In short, management refers to
the process of delegating tasks to employees to be performed successfully.
Information System
Information system is the structure sub-divides the total responsibility if a strategy is to be effectively
implemented, the organisational arrangements are necessary as they provide the information to
 managers to perform their task and relate their work to others. Information system, therefore, serves
the important purpose of enabling the managers to know what they need to grasp in order to perform
their tasks and also to coordinate their activities.
There are essentially functions (roles) that a team needs to perform for which it needs clear and lateral
thinking and some form of systematic approach (information system) to the collection and use of
information:
1. Collect basic information. Before tackling a problem, a team needs good basic information about
the extent, dynamics and nature of the problem.
2. Convert ideas and information into measures. Many good ideas are implemented with a “let’s wait
and see what happens’ approach – often good data about the idea, is not collected in a way that
helps modify the idea, and the evaluation is often more subjective than it needs to be.
3. Analysing processes. When a team has the task of securing process improvements, it will often
need to examine and understand the process, and to do this in a more objective way than has been
the case hitherto.
4. Designing improved processes. Understanding a process is the first step to improving it.
5. Establish standards. For a team to implement change successfully, it needs to establish targets for
both its work and the staging points for achieving major gains in its performance.
6. Manage performance. Having achieved an acceptable level of performance against its established
standards, the team needs to record how this is achieved (describe its effective process) and sustained.

UNIT 3 – LEADERSHIP AND ORGANIZATIONAL CLIMATE

CONTENTS
THE CONCEPT OF LEADERSHIP
Many theorists have recognized the central role of a leader in organizational development. Hersey and
Blanchard (1996) have observed that “the successful organization has one major attribute that sets it
apart from the unsuccessful organization: dynamic and effective
leadership.”
Leadership has been defined in various ways. The central concept of leadership is power to influence
others and get them to do the things they otherwise would not do. Leadership can be defined as “the
activity of influencing people to strive willingly for a group objective” (Terry, 1960).
ORGANIZATIONAL CLIMATE
One of the most important and significant characteristics of a great workplace is its organizational
climate. Organizational climate is a mechanism for understanding the problems and challenges of
organizations. It is described as a set of perceptions which individuals have about different work
aspects in the organization (Evans, 1996).
Online Business Dictionary defines it as properties of the business environment in a workplace
observed by staff that strongly influences their actions and job performance. For example, a perceptive
business manager might take the trouble to survey employees about the organizational climate, to
identify and promote those aspects that are most conducive to achieve corporate objectives.
 Distinguish between organizational culture and organizational climate. What is the relationship
between the two?

Leadership and Impact On

Organizational Climate
Recall that leadership is the process by which a person influences others to accomplish an objective, and
directs the organization in a way that makes it more cohesive and coherent.
Six leadership types can be identified:
i) The Coercive style (The Dictator) ii) The Authoritative style (The Visionary) iii) The Affiliative style
(The People’s person) iv) The Democratic style (The Listener)
v) The Pacesetting style (The
Superman/Superwoman)
vi) The Coaching style (The Nurturer)

UNIT 4 KEYS TO SUCCESSFUL ORGANIZATIONAL CHANGE

DETERMINING READINESS FOR CHANGE
The change plan for an organization should be a reflection of the organization’s readiness for change. A
different plan is required where there is low readiness compared to a situation where people are highly
motivated or ready to change. An assessment inventory could be used to determine an organization’s
readiness for change. The questions or list of factors in the assessment inventory are clustered around the
following organizational characteristics:
I. Previous responses to change
II. Significant changes currently taking place
III. Visible support from top management.
These lists of factors should be developed and used to assess the organization’s readiness for change.
GAINING COMMITMENT AND SUPPORT It should be noted that successful leaders of change are
not lone rangers. There are three levels of support that you will need for effective successful change in
any organization. They include:
I Top management: in selecting a top management sponsor, the person to be selected should be carefully
considered. A checklist of characteristics of an effective sponsor should be highlighted such as
• Effective at influencing peers
• Courage to engage opponents of the initiative or change.
II Critical stakeholders: Members of the change team should be key representatives from critical
departments. Selection criteria should be developed for these individuals.
To gain the commitment and support of the general population, we need to communicate from inception
to completion of the project. Most organizational change is managed using strategic communication that
is noticeably similar to marketing a new product.
MANAGING TRANSITION AND TRAINING
This is the phase where the organization works to make the actual transition from the current state to the
future state. This stage involves activities designed to make a change in the organization, for example,
creating and/or modifying major structures and processes in the organization. These changes might require
ongoing coaching; training and enforcement must continue, including strong, clear, ongoing
communication about the need for the change, status of the change, and solicitation of organization
members’ continuing input to the change effort.
ASSESSING THE IMPACT
Significant organizational changes could disrupt the work lives of numerous individuals. When the impact
of change is measured, it will reduce the resistance that could undermine the change plans. The impact of
change could be on specific individuals or departments. In assessing the impact of any change, the
following five-step process is recommended:
i. Identify stakeholders that could be impacted by the change
ii. Document the stakeholder concerns or issues. This can be accomplished through interviews or by
discussions with stakeholders who are members of your change team. iii. Prioritize issues
according to level of concern
iv. Create a time-line for resolving issues
v. Resolve issues through members of the change team where possible.

Module 3
UNIT1 CONTINGENCY AND MULTI-CONTINGENCY THEORIES OF
ORGANIZATIONAL DESIGN
CONTINGENCY THEORIES OF ORGANIZATIONAL DESIGN
Contingency theories (CT) are a class of behavioral theory that contends that there is no one best
way of organizing or leading and that an organizational design or leadership style that is effective
in some situations may not be successful in others. Contingency theory states that the most
effective organizational characteristics are those that fit the contingency variables. Contingency
theories of organizational design are referred to as structural contingency theory. Structural which
states that organizational structure must be adaptable to each business and that each business must
make moves to ensure they are operating within the most efficient structure to support the business.
Contingency theory seeks to study the behavior of people at work, because the knowledge of such
can help better understand the employees in a work environment as well as influence the leadership
structure in the organisation. Such Knowledge can also be used to assess, manage and predict
behavior of employees so that organizations can better understand how to motivate individuals.

A variety of factors, referred to as contingency factors, influence structural contingency decisions

and plans. These factors include:
1. Internal Influences
Internal contingency factors are those that occur within the walls of the organization. Examples
include job tasks and organizational size. Structural contingency plans can be affected by how
tasks are performed and the number of employees needed to operate the company efficiently. For
instance, the introduction of new technology can lead to changes in the way tasks are completed
and thus effect the number of employees needed to accomplish those tasks.
2. External Influences
External factors are those that influence how the organization fits within, and adapts to, the
surrounding business environment. The best way to organize depends on the nature of the
environment to which the organisation must relate.
CHARACTERISTICS OF CONTINGENCY THEORY
1. The characteristics of the external environment affect an organization’s ability to obtain
resources.
2 To maximize the possibility of acquiring the scarce resources, management must allow an
organization’s departments to perform in ways most likely to enable them obtain the
resources
3. A mechanistic structure is ideal for organizations in stable environments (Theory X
assumptions); or
4. An organic structure for organizations is ideal for organizations in changing environments
(Theory Y assumptions)
5. There is no one best way to organize or manage.
6. Organizational structure depends on the environment in which an organization operates

Examples of characteristics of the external environment include:

a. Changes in the environment.
b. The entry of new competitors.
c. Unstable economic conditions.
THE MULTI-DIMENSIONAL CONTINGENCY MODEL
This is a systems model, which incorporates a simultaneous multidimensional concept of fit.
Baligh, et al (1996) and Burton and Obel (1998) developed a multi-dimensional contingency
approach that relates to organizational size, climate, strategy, technology, environment, and
leadership preferences to organizational structure and design to assure an efficient, effective and
viable organization. Burton and Obel (1998) also developed four types of fit: Situational Fit,
Contingency Fit, Design Parameter Fit, and Total Fit. According to them, situational fit tries to
align the design with the situation or the factors. They argue that the firm’s environmental,
technological, strategic, and management situations are aligned and that contingency fit is the
traditional fit notion among the multiple variables in the organizational design and a set of
contingency factors. They opined that design parameter fit has the internal consistency among the
structural dimensions and that Total fit is simultaneous realization of these three fit criteria and is
obtainable if no misfit exists.
CONTINGENCY THEORY AND SIGNIFICANCE TO ORGANIZATIONAL BEHAVIOR

The contingency theory focuses on specific situational factors which can affect the direct
relationships between independent and dependent variables. The theory explains that there is not
an exact science to organizational behavior. There is no one best way to structure a corporation
and solve employee problems. It all depends on the situation.
Dependent Variables:
Dependent variables are affected by independent variables. For instance management wants to
know what can affect worker productivity, turnover, absenteeism and job satisfaction. They would
like to find out ways to make workers increase their daily productivity in the work place.
Independent Variables
What can cause the change in the dependent variables? What can help organisations improve
worker productivity, turnover and absenteeism? The answer is independent variables. Variables
such as educational training, motivation techniques, communication skills, group work teams,
stress reduction programs, human resource policies and flexible organizational structures can all
affect dependent variables within a company.

UNIT 2 DESIGN DYNAMICS: MANAGING CHANGE AND

MULTIORGANIZATIONS
UNDERSTANDING DESIGN DYNAMICS AND ORGANIZATIONAL DESIGN
Design Dynamics may be referred to as a general purpose framework for describing change
producing forces which tend to produce activity and change in any situation, be it business,
economy, environment and all other social mechanism. However, in this particular situation, we
are interested in describing those forces that produce change in the organization. Therefore in the
case of an organization, Design Dynamics attempts to illustrate the complex interplay or
relationship between the tangible aspects of the organization- the resources which include, man,
machines, money and materials (the ‘four Ms’ of Management) and the intangible aspects of the
Organization such as culture, policies, processes, strategies and structure.

DRIVERS OF CHANGE
No organization can exist in isolation from the external environment, which includes the natural
environment, the government policies, trade systems, technological environment and cultural
beliefs. In today’s global economy, organizations have been undergoing significant and continuous
change in response to the demands of the changing customer, the changing workforce and the
changing world with the significant competition. As more and more organizations today face a
dynamic and changing environment, they have no choice but to adapt to changes or they will be
left behind and finally become extinct. According Coates (2015) organizational change is one of
the drivers of disruption in the work place and without disrupting the organization; there can never
be a change.
Robbins, Judge, Millet and Waters-Marsh (2008) identified six drivers or forces that bring about
change and these are:
i. The Nature of the Workforce
ii. Technology
iii. Economic Shocks
iv. Competition
v. Social Trends
vi. World Politics
APPROACHES FOR MANAGING CHANGE
There are several approaches to managing change and these include Kurt Lewin’s Classic
Three-step Model of Change Process, Kotter’s Eight Step Plan, Action Research and
Organizational Development (Robbins et al, 2008).

i. Lewin’s Three- Step Model

Lewin is of the view that successful change in organizations should follow three steps,
referred to as Lewin’s three-step change model, refer to figure 1 below

Unfreezing Movement Refreezing

 Figure 1. Lewin’s three- step change model (Robbins et al, 2008)

• Unfreezing the Status quo – The status quo can be considered to be an

equilibrium state. Unfreezing is therefore the change effort necessary to move
from this equilibrium, which is by overcoming the pressures of both individual
resistance and group conformity.
• Movement to a Desired End State–The movement refers to the change
process that transforms the organization from the status quo to a desired end
state. Research on organizational change has shown that for organizational
change to be effective, it has to happen quickly.
• Refreezing the New Change to make it Permanent–Refreezing entails
stabilizing a change intervention by balancing driving and restraining forces.
Once a consolidation change has been implemented, if it is to be successful, the
ii. Kotter’s Eight –Step Plan For Implementing Change
John Kotter built on Lewin’s three step model to create a more detailed approach to
implementing change. Kotter began first by listing some common mistakes that
managers make when trying to initiate change and these mistakes include:
• Inability to create a sense of urgency
• Failure to create a coalition for managing the change process
• The absence of a vision for the change and to effectively communicate that
vision
• Failure to remove obstacles that could impede the achievement of the vision
• Failure to provide short-term and achievable goals
• The tendency to declare victory too soon, and
• Not anchoring the changes into the organization’s culture.

iii. Action Research

The process of action research consists of five steps namely:
• Diagnosis- At this stage, the change agent or the consultant begins by gathering
information about problems, concerns and the needed changes from members of the
organization.
• Analysis – At this stage, the information gathered are synthesized into primary
concerns, problem areas and problem concerns
• Feedback – This requires sharing with employees what has been found from steps or
stages 1 and 2 and the employees with the help of the change agents develop action
plans.
• Action - when the action part of the action research is set in motion, the employees
and the change agents carry out the specific actions to correct the problems that have
been identified
• Evaluation- the final stage is the evaluation of the action plan’s effectiveness. iv.
Organizational Development
Organizational Development (OD) is an all-embracing term used to refer to a collection of
planned –change interventions built on humanistic-democratic values that seek to improve
organizational effectiveness and employee well-being.
The Organizational Development Model or theory values human and organizational growth,
collaborative and participative processes and a spirit of inquiry. Though the change agent may
 be directive but there is strong emphasis on collaboration. Some of the underlying values in
Organizational development efforts include:
• Respect for people – individuals are perceived to be responsible, hence they should be
treated with dignity and respect
• Trust and support – The effective organization is characterized by trust, authenticity,
openness and a supportive climate.
• Confrontation – Problems should be openly confronted
• Participation –The more those who will be affected by the change are involved in the
decisions surrounding that change, the more they will be committed to the
implementation of those decisions.
RESISTANCE TO CHANGE
There is always the tendency for individuals as well as organizations to resist change. This is
considered to be normal as well as positive as it provides a degree of stability and predictability to
behavior. Resistance to change does really manifest in a regular or fixed pattern. Resistance may
be overt, implicit, immediate or deferred. It is easiest for management to deal with resistance to
change when it is overt and immediate i.e. when employees quickly respond by voicing complaints,
engaging in a work showdown or threatening to go on strike when a change is proposed. It is even
more challenging to manage resistance that is implicit and deferred.
Individual Sources include:
• Habits- old habits die hard, they say. When People are set in their ways, they will naturally
resist when confronted with change.
• Security – people with high need of security tend to resist change because it threatens their
feeling of safety.
• Economic Factors- changes in job tasks or routine can induce economic fears especially
if pay is tied to performance and those who are concerned about their inability to perform
the task will resist change
• Fear of unknown – the fear of unknown may also lead to resistance to change
• Selective Information Processing- Individuals tend to choose what they want to hear and
ignore information that may challenge the world they have created for themselves.
Organizational Sources include:
• Threat to expertise- changes in organizational pattern may threaten the expertise of
specialized groups.
• Group Inertia- Individuals may want to change but group norms may act as a constraint
• Limited focus of change- organizations are made up of different interrelated systems.
Limited changes in sub systems tend to be nullified by the larger system.
• Threat to Established Power Relationships- any re organization of decision making
authority can threaten long established power relationships.
• Threat to Established Resource Allocation- groups in the organizations that control
sizeable resources see change as a threat.
Tactics for Overcoming Change
Poorly managed change brings about loss in productivity, moral issues, resistance and outright
failure. In order to ensure that an organization’s transformational initiatives are met with less
resistance and achieve a greater level of buy in by leaders, managers and colleagues, the following
seven tactics as suggested by change agents and cited in Robbins et al (2008) are used for dealing
with resistance to change.
 i. Education and Communication
Communication can reduce resistance to change in two ways; one is by helping the
employees see the logic of a change, thereby fighting the effects of misinformation and
poor communication.
ii. Participation
Prior to making a change, those opposed to the change can be brought into the decision
process. Assuming that the participants are competent enough to make meaningful
contribution, their involvement can reduce resistance, obtain commitment and increase
the quality of the change decision.
iii. Building Support and Commitment
When employees’ fear and anxiety are high, they tend to favour the status quo and resist
change. Firing up employees can help them to emotionally commit to change. Change
agents can offer a range of supportive efforts such as counseling and therapy, new skills
training and short paid leave of absence all in order to facilitate adjustment and reduce
resistance to change.
iv. Negotiation
Negotiation as a tactic may be necessary when the resistance comes from a powerful
source. If the resistance is centered in a few powerful individuals, a specific reward
package can be negotiated that will meet their individual needs.
v. Manipulation and Cooptation
Manipulation and Cooptation compared with negotiation are relatively inexpensive
ways to gain the support of adversaries even though it may backfire if the targets
become aware that they are being tricked or used.
vi. Selecting People Who Accept Change
Research suggests that selecting people based on a resistance-to-change scale works
well in sorting out those who tended to react emotionally to change or to be rigid. Those
who take positive attitude to change, are willing to take risk and have positive self-
concept are perceived to cope better with change.
vii. Coercion
This involves the application of direct threat or force on the resisters. Coercion also
includes threat of transfer, loss of promotions, negative performance evaluation and a
poor letter of recommendation.

CONCEPTUAL CLARIFICATION OF INCENTIVE

Every organisation wants to retain capable and effective workforce hence the need for such
employees to be rewarded with well defined incentives. Incentive is a powerful psychological
construct that is used to change behaviour. Drawing from hundreds of studies, Kohn demonstrates
that people actually do superior work when they are enticed with money, grades, or other
incentives. An incentive is something that motivates an individual to perform an action.
Adequate incentives have been found to be one of the means which organizations can adopt to
motivate and increase their workers’ performance. Incentive programs are put in place by various
organisations to compensate and reward performance of employees who perform more than
expectation (Schiller 1996). Incentive packages are financial or non-financial rewards offered to
employees to compel them to exert more effort into any given task (National Commission on
Productivity and Work Quality 1975).
DEFINITION OF INCENTIVE
Incentive is a force that causes employees to behave in certain ways and on any given day.
Employees may choose to work as hard as possible at a job, to work just hard enough to avoid a
reprimand or to do as little as possible (Griffin, 2002). Incentives are designed to get the maximum
performance from the employees and help retain the most productive among them (Arnold, 2013).
TYPES OF INCENTIVES
Monetary incentives
Monetary incentives are used by employers of labour to retain their best brains and as well
compensate them for a job well done and excellence of job performance. The incentive can come
in many forms: basic salary, compensation, insurance, profit sharing, retirement plans, employee
stock, overtime pay, attendance incentives, competition and contests, output-oriented merit
increases, performance bonuses, safety incentives, suggestion awards etc. Monetary incentive is
used to describe incentive-payment plans which tie incentives directly or indirectly to productivity
standard (Ubeku, 1975; Alaba & Owodunni, 2007).
Non-monetary Incentives
Non-monetary incentives are used to reward employees for excellent job performance through
opportunities (Kepner, 2001). It usually comes in form of more enabling authority, award,
participating in the management, promotion, holidays, better working environment, written
recognition, gifts, formal dinners, informal parties, plaques, etc. (Awar & Mehbood, 2007).
CLASSIFICATION OF INCENTIVES
Incentive is a form of pay performance plan. There are two basic types of incentives:
1. Individual Incentive Plans, and
2. Group Incentive Plan.
Individual Incentive Plans
Individual incentive plan has been in existence over a hundred years. For example, in those days,
a person loading iron in a steel mill could earn as much as ten naira per long iron when on incentive
plan. As a result, a highly skilled loader could make 50 percent more money per day than an
individual who was being paid a basic day rate. So individuals who were willing to work hard and
had the necessary stamina could opt for incentive pay that was determined by the amount of iron
they were able to load each day. Most sales people work under an individual incentive pay plan
earning; for example, 10 percent commission on all sales.
1. The Use of Bonuses
Another common form of individual incentive pay is bonuses. The signing bonus is one of the
biggest incentives for athletes, footballers and managers. Although, this bonus package can be
extremely large, successful managers and individuals who can generate large accounts for a firm
can also expect sizeable bonuses.
2. The Use of Stock
Another form of individual incentive pay is the stock-option plan. This plan is typically used with
senior-level managers and gives them the opportunity to buy company’s stock in the future at a
predetermined fixed price.
GROUP INCENTIVE PAY PLANS
Organizations are increasingly aware that teams and teamwork can lead to higher productivity and
better quality than do individuals working on their own. As a result, group incentive pay plans
have become increasingly popular.
 1. Gain-Sharing Plans
This is one of the common forms of group pay. These plans are designed to share with the group
or team the net gains from productivity improvements.
2. Profit-Sharing
Another common group incentive plan is profit sharing. Although it occurs in different forms,
typically some portion of the company’s profits is paid into a profit-sharing pool, and this is then
distributed to all employees. Sometimes, this is given to them immediately or at the end of the
year. Some plans defer the profit share, put it into an escrow account and invest it for the employees
until retirement.
UNIT 4 INTERNAL MARKETING IN ORGANIZATION CONTENTS
THE MEANING OF INTERNAL MARKETING
Scholars have variously given their perceptions about the theoretical construct of ‘internal
marketing’. Some of these conceptual underpinnings are highlighted below.

Varey (1995) viewed internal marketing as the concept of marketing in the internal environment
of an organisation.
Rafiq and Ahmed (2000) conceptualised internal marketing as an organised attempt using a
market- like approach in order to cope with the organisational resistances to changes and balance,
motivate and coordinate the employees in line with efficient execution of strategies with the aim
of customer satisfaction through the process of creating motivated customer oriented employees.
Lancaster et al (2002) saw internal marketing as any form of marketing in an organisation which
focuses staff attention on internal activities that need to be changed in order to enhance external
marketplace.
HOW TO DEVELOP INTERNAL MARKETING PLAN AND ITS IMPLEMENTATION

The best way to conduct effective internal marketing is to create a comprehensive plan. It involves
creating persuasive and informative messages that resonate with every department and employee
within an organisation. Internal marketing is based on the idea that customers’ attitudes towards
an organisation are based on the entire experiences with that organisation and not just their
experiences with company’s products or services. Internal marketing is one of the most
complicated forms of marketing. Marketing communications is the most tangible aspect of the
internal market mix and represent the communication methods used to inform and persuade
internal customers to change.

TACTICAL STEPS IN INTERNAL MARKETING

The various tactics of internal marketing in organizations include the following

• Identify every area where the organization comes into contact with the market place
• Allow top performers to provide feedback on internal marketing and Human Capital issues
• Use new letters or in-house radio programs to spread information and reinforce
organization design
• Make the marketing strategy a feature of employee training programs
• Provide access to information as frequently as possible
• Create performance based incentives
• Provide comprehensive and ongoing training programs for employees at all levels
Managerial Influence on internal markets

In most organizations the management design of the traditional market is a top-down hierarchical
structure. Top management makes the major decisions and consequently the participation of
managers at operating levels of an organization is involved. Top-down management provides a
temporary solution but the increasing emerging global challenges in the business world need the
input of all employees to capture the competitive markets. The service economy demands dynamic
organizations which initiate creativity and innovations. Organizations are faced with the
challenging task of designing organizational structures that permit spontaneous participation from
employees, but at the same time maintain management control.

The need for knowledge input into an organization is crucial, therefore it becomes paramount for
organizations to realize that the real knowledge base does not exclusively lie with top management
but is spread out among employees, customers, suppliers, communities of practice and other
stakeholders. The focus of the organizations’ communication strategy must shift from top to
bottom and there is need for organizations to consciously develop and design internal market
processes that give rise to bottom-up, side-to-side as well as top-down communication to spur
employees to share their knowledge with the organization. Organizations which embrace the idea
of an internal market need to provide leadership to foster collaborative synergy.
EMPLOYEES’ INFLUENCES ON INTERNAL MARKETS

The philosophy of internal marketing connotes that employees are counted as internal customers.
The ability of management to influence and satisfy the needs of other employees inside the
organizations precedes external customer satisfaction. If internal customer relationships are
successful, the outcome will create satisfied or delighted external customers. The internal market
must support and nurture the development of an internal social system with its own culture that
stresses individual initiative, embraces change and supports employees. This social system should
be enforced in the minds of employees and they must clearly understand that it is a shared idea as
opposed to being part of policies and procedures. The objective of the internal market is to buy
and sell between individual units within the organization and create healthy competition between
the different units.

Four categories of employees within the internal market are identified according to the degree and
type of contact they have with external customers. The categories are contactors, modifiers,
influencers and solitaries. Contactors are the employees who frequently or periodically have direct
contact with external customers. Modifiers have less frequent or periodic direct customer contact
and usually the contact is not face-to-face. Influencers are the employees who traditionally have
no direct contact with customers although they are involved in making decisions that will influence
customer contact. The solitaries are those employees who are isolated from all contact with
customers.
Organizational relevance of Internal Marketing
The practice of internal marketing is beneficial to organisations in the following ways:
• It encourages employees in every department of the organisation to perform better
• It creates a common understanding of organisational goals and strategies
• It places value on the employees contribution to the organisation
• It increases employee morale and motivation
 • It helps non marketing staff to do their jobs with a marketing focus in mind
• It improves employee development and customer retention
• It integrates organizational culture with the employees personal and professional needs
• It allows different departments to coordinate and cooperate effectively
• It enhances effective information flow between different departments
• It makes it easier for employees to understand the expectations placed on them

UNIT 5: DEVELOPING ORGANIZATIONAL CHARTS (PROCESS AND PEOPLE)

THE MEANING OF ORGANIZATIONAL CHART
An organizational chart is the linking of departments and jobs within an organization. It is a
diagram that shows the formal structure of an organization, indicating the reporting relationships.
An organizational chart can be likened to an X-ray showing the organization’s skeleton, an outline
of the planned, formal connections between individuals in various departments. The diagram
below shows a typical organizational chart
An organizational Chart showing the titles of the individuals and the reporting relationships,
Information Instruction
President and directives

Vice vice
President President

Manager Manager Manager Manager

Efforts at coordination
Source Greenberg J & Baroon A.R (2008) Behavior in Organizations, New Jersey, Prentice Hall
P350
As you can see, the various boxes in the diagram show the positions of the individuals in the
organization and the lines connecting them. The boxes represent the individuals performing
specific jobs, titles of the individuals and the formally prescribed pattern of communication
between them. In a typical organization, jobs are well defined and each person is responsible for
performing a particular job.
KEY ORGANIZATIONAL DESIGN PROCESSES
As we have seen, the organizational chart is the most visible representation of the organizational
structure and underlying components. The underlying components are (1) formal lines of authority,
and responsibility, (the organizational structure designates reporting relationships by the way jobs
and departments are grouped) and (2) formal systems of communication, coordination, and
integration (the organizational structure designates the expected patterns of formal interaction
among employees).
An important design process is differentiation which is the process of deciding how to divide the
work in an organization. Differentiation ensures that all essential organizational tasks are assigned
to one or more jobs and that the tasks receive the attention they need. The next stage in the process
of organizational design is integration which is the process of coordinating the different parts of
an organization. Integration mechanisms are designed to achieve unity among individuals and
groups in various jobs, departments, and divisions in the accomplishment of organizational goals
and tasks. Integration helps keep the organization in a state of dynamic equilibrium, a condition in
which all the parts of the organization are interrelated and balanced.

THE COMMUNICATION PROCESS IN ORGANIZATIONS

Communication refers to the transference of meaning among the members of a group. According
to Nelson and Quick (2003), communication is the evoking of a shared or common meaning in
another person. Interpersonal communication is communication that occurs between two or more
people in an organization. Interpersonal communication is important in building and sustaining
human relationships at work. Interpersonal communication cannot be replaced by the advances in
information technology and data management that has taken place during the past several decades,
and no organization can function properly without communication.
Before communication can take place, a purpose, expressed as a message to be conveyed is needed.
It passes between a sender and a receiver. The message is encoded (converted to a symbolic form)
and passed by way of some medium (channel) to the receiver, who retranslates (decodes) the
message initiated by the sender. The result is transference of meaning from one person to another.
The key parts of the communication process are as follows: 1.The sender, 2. Encoding, 3. the
message, 4.The channel, 5. Decoding, 6. The receiver, 7. Noise, and 8.
Feedback.
Downward communication process in organizations
The Communication processes in an organization can flow vertically or laterally, the vertical
dimension can be further divided into downward and upward direction. Let us consider these
processes of communication, first downward communication.
Downward communication in an organization is the communication from the supervisors to
subordinates. It flows from one level to the next lowest one and it comes down to the bottom of
the organization chart. When we think of managers communicating with employees, the downward
pattern is the one we are usually thinking of. Although many things may be communicated in the
process of communication, however official messages flowing downward generally consist of
instructions, directions, and orders-messages telling subordinates what they should be doing. We
also would expect to find feedback on past performance flowing in a downward direction such as
when managers tell subordinates how well they have been working. For example, a sales manager
might direct members of his or her sales force to promote a certain product and then congratulates
them for being successful.
UPWARD COMMUNICATION PROCESS IN ORGANIZATIONS
Another form of vertical communication is upward communication. Upward communication flows
to a higher level in the group or organization. It flows from subordinate to superior. In other words,
information flows from lower level to higher level within an organization. Messages flowing in
this direction tend to contain information managers needs to do their jobs, such as data required
for decision making and the status for various projects. Upward communication is designed to
keep managers aware of what is going on. Among the various types of information flowing upward
are suggestions for improvement, status reports, reactions to work related issues, and new ideas.
It has been established that upward communication occurs much less frequently than downward
communication. In fact, one classic study found that 70 percent of assembly line workers initiated
communication with their supervisors less than ones in a month. Further research has found that
managers direct less than 15 percent of their total communications to their superiors. And when
people do communicate upward, their conversation tends to be shorter than their peers.
Importantly, upward communication is often inaccurate, for example, subordinate frequently feel
they must highlight their accomplishment and downplay their mistakes if they are to be looked on
favorably. Similarly, some individuals fear that they will be revoked by their supervisors if they
anticipate that their remarks will be perceived as threatening. As a result, many people frequently
avoid communicating bad news to their superiors or supervisors, or simply “pass the buck” for
doing so to someone else. This, of course, represents another instant of the MUM effect discussed
earlier in conjunction with downward communication. Clearly, this same phenomenon occurs here
as well as you might imagine, because superiors rely on information when making decisions,
keeping silent about important news, even if it’s bad, may be one of the worse things a subordinate
Lateral communication
When communication occurs among members of the same work group, among members of work
group at the same level, among managers at the same level, or among any horizontal
communications, we describe it as lateral communication. According to Greenberg and Baron
(2008), lateral communication refers to messages that flow between different people at the same
organization level. Typically, lateral communication is characterized by efforts at coordination
(attempts to work together). Consider for example, how a vice president of marketing will
coordinate her or his effort to initiate an advertising campaign for a new product with information
from the vice president of production about when the first product will be coming off the assembly
line. Such communication is essential for organization to operate effectively. These days, as
organizations tends to be eliminate layers of hierarchy and are having people work together in
teams in which individuals are relatively equal, lateral communication is becoming increasingly
common.
INFORMATION COMMUNICATION
The pattern of informal connections between people is known as an informal communication
network. As you might imagine, informal communication networks, because they are so
widespread, constitute an important avenue by which information flows in organization. In fact,
middle managers ranked informal networks as better sources of organization information than
formal networks. It may be said, therefore, that if an organization’s formal communication
networks represents its skeleton, then its informal communication network constitute its central
nervous system.
IMPORTANT FACTORS TO BE CONSIDERED IN DEVELOPING ORGANIZATIONAL
CHARTS
In developing organizational charts, the following factors should be considered
Simplicity: The structure should be made simple as much as possible, so that it can be understood
and operated by those involved.
Least cost solution: As much as possible, more complex organizations such as the matrix structure
which may be more costly to administer and monitor should be avoided.
Motivation: The motivation of those involved needs to be considered in the context of any
proposed changes.
Organizational culture: Existing organizational culture is vital to the choice between structures.
In addition to these issues, there is a connection between the range of an organization’s business
and the most appropriate organizational structure. The table below shows the nature of business and
the right structure to adopt.
Nature of Business activity and Organizational structure Nature of business
Likely organizational structure
Single Business Functional
Range of products extending from a Functional but monitor each range of
Product using separate profit and loss
accounts
Single business
Separate businesses within group Divisional
With limited links
Separate businesses within group with Matrix (or divisional with coordination
If matrix is difficult to manage
Strong links
Ideal factory innovative structure
Unrelated business Holding company
Related businesses owned jointly or Holding company
By minority shareholding
Source Lynch R, (1997) corporate strategy, London, Pitman publishing, P718
Environment
The business environment plays important role in determining the type of structure to be put in
place. According to Lynch (1997), there are four main characteristics that influence
organizational structure. These are discussed below.
Rate of change: When the organization operates in a more dynamic environment, it needs to be
able to respond quickly to the rapid changes that occur. In static environments, change is slow
and predictable and does not require great sensitivity on the part of the organization. In dynamic
environments, the organization structure and its people need to be flexible, well coordinated and
able to respond quickly to outside influences. The dynamic environment needs a more flexible,
organic structure.
Degree of complexity: Some environments can be easily monitored from a few key data
movements. Others are highly complex with many influences that interact in complex ways. One
method of simplifying the complexity is to decentralize decisions in that particular area. The
complex environment will usually benefit from a decentralized structure.
Market complexity: some organizations sell a single product or variations on one product. Others
sell ranges of products that have only limited connections with each other and are essentially
diverse. As markets become more complex, there is usually a need to decentralize the
organization as long as synergy or economies of scale are unaffected.
Competitive situation: with friendly rivals, there is no great need to seek the protection of the
centre. In deeply hostile environments, however, extra resources and even legal protection may
be needed: these are usually more readily provided by the central HQ. As markets become more
hostile, the organization usually needs to be more centralized.
APPROACHES TO DEVELOPING ORGANIZATIONAL CHARTS
TRADITIONAL ORGANIZATIONS – The traditional organizational chart gives each manager
a specific area of authority and responsibility; but it also pits managers against each other. For
example, if a purchasing manager has budgeted N50, 000 for a quantity of a specific part and the
inventory control manager must order them on rush basis for N60, 000, the purchasing manager’s
responsibility and authority are subordinated to the inventory manager’s needs.
CELLULAR ORGANIZATION – In the past decade more and more companies have
begun to use a cellular organization. Here workers cooperate in teams (cells) to manufacture total
products or subassemblies. Each cell is responsible for the quality and quantity of its products.
Each has the authority to make adjustments to improve performance and product quality.
The basic difference between the cellular and the traditional organization is that workers in the
cells are all responsible for their output. The linear competitiveness of the traditional structure is
avoided. Instead each individual is pressured to perform so that the group will succeed. Cells
tend to be tightly self-monitoring and self-correcting. In a cellular organization companies tend
to have much smaller staffs overall, with middle management positions reduced and lean
management numbers at the top.
NETWORK DESIGNS
To meet the challenges of revolutionary changes in the business environment, organizations are
moving toward network structures. Net work organization is described by Luthans (2008) as
follows, ‘delayered, highly flexible, and controlled by market mechanisms rather than
administrative procedures, firms with this new structure arrayed themselves on an industry value
chain according to their core competencies, obtaining complementary resources through strategic
alliances and outsourcing”
THE VIRTUAL ORGANIZATION
According to Luthans, (2008), the term virtual organization has emerged not because it describes
something distinct from the network organizations but because the term itself represents the new
information age and the partnering, alliances, and outsourcing arrangements found in an
increasing number of global companies. Virtual organizing requires a strong information
technology platform. The virtual organization is a temporary network of companies that come
together quickly to exploit fast-changing opportunities.
PROCESS AND PROJECT MANUFACTURING – How a company organizes may be
related to the type of manufacturing carried out. Process manufacturing, for example, is carried on
in various forms. This type of manufacturing applies various processes, or methods to change
materials into finished goods.
 The assemble process puts parts together to form whole products, such as cars and trucks.
 The continuous process uses mass production techniques to make many items of one kind,
such as roller bearings, nuts, or bolts.
 Intermittent processing uses one process for a batch of goods, and then changes process to
produce goods having some differences from the earlier batches
(e.g., stainless steel restaurant kitchen drain boards and fitted metal cabinets.)
 The analytical process breaks down materials into components to extract the parts needed, as
in oil refining and smelting.
 The synthetic process brings items together to create an entirely different product. For example,
in the synthetic fabric industry and the rubber industry, materials are changed by chemical and
heat processes before being formed.
 The extractive process removes a product from raw material, as in coal mining.
Project manufacturing usually involves very large projects for which materials and workers
must be removed. There is no assembly line or workstation layout within a factory or shop;
the product is built in place. Examples include the building of large ships, large printing
processes, and high-rise.