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The structure of the organization plays a key role and ING's organization has sustained it and helped in its expansion this far. Basically then it can be assumed that the current structure is functional with some problems. The views regarding the typical system can be explored first so that the INGs system can be placed better. In the basic framework it seems to be working, and it is better to leave the structure which is working till there is found a very sure alternate. Some things that would be essential to understand would be what work specialization is, chain of command and span of control. These are the basis of any system.
Traditional and Contemporary views of work specialization, chain of command, and span of control
The span of control relates to the number of managers needed at each level of the system, in other words the manager's control of the staff and his or her subordinates weakens with the greater number. Span essentially relates to the number of managers and the number of the people reporting to them in a ratio. The effective span of control, i.e. The number of personnel controlled by a manager may be more in a situation where all the employees performed identical work, but may be less where there is variety of operations and many different personnel who are engaged in various activities are controlled by a single manager. The span of control if less that is a manager controls only a few personnel may necessitate the hierarchy to employ more managers and consequently turn the system into a bureaucracy as it happened with Google which had managers with short spans. (Gitman; McDaniel, 2008)
In the ING, the span of control is clear with the individual units but is not clear in the case where the regional offices of ING at Malaysia are concerned. While the independent country units seem to have evolved a span of control within the country, the regional office in truth has neither the authority nor any span of control that can be specifically seen and this is the biggest problem of the system. (Richard Ivey School of Business, 2008)
2. Five forms of departmentalization.
Work specialization has created a new breed of workers who are specialists in different areas which are departmentalized and these specialists need coordinators and departments are created so that the specialists are grouped into one head and then coordination is thus made possible through a manager for the department. The department in turn would help in the attainment of the overall objectives of the company. (Robbins, 2009)
There are five forms of departmentalization with the departments interacting with each other. These five forms are -- functional departmentalization where the departments are created on the basis of the specialist functions, for example the marketing department comprises of marketing specialists and IT department consist of IT engineers. The departmentalization occurs also on the basis of the product where multiple product ranges may require different departments for the manufacture process. The customer oriented company seeks to handle customers with a separate wing or department called the customer department where the customer is attended to directly, and in modern systems it also includes direct interaction electronically and also the 'Customer Relation Management' processes. (Robbins, 2009)
There could be departments that attend to the geographic peculiarities and these geographic departments are created to handle geographic differences that can occur in different places, for example an exporter from Japan to the U.S. may need to have a department in U.S. that complies with the U.S. laws, has more English speaking staff and recognizes and attunes to the culture of the U.S. The last type is the process-based departments, and is based on the process by which the company provides services. There are processes and procedures to be followed and these are done in meticulous order. Examples are where there are forms to be filled and processing of applications to be done like in insurance and other companies that is based on some process created by law or custom which has to be followed. (Robbins, 2009)
The consultants who submitted their reports saw one aspect of the departmentalization of ING but the complete comprehensive view was not obtained because of the error in seeing the departmentalized view of a company that perhaps does not operate on a departmentalized system at all. The system does not function strictly on the department mode. (Richard Ivey School of Business, 2008)
3. Differentiate, authority, responsibility, and unity of command,
The historical model of responsibility and power was based on authority. There is an assumed right that comes with a position held and this right was perceived to be the sole source of power and strength. It was also a person's sphere of influence. Thus managers were by nature of their position all powerful. However the notions changed because of the revolution in technology where now there are specialists who are needed to assist the manager in many of the roles, and the manager is now dependent on the specialist and therefore power is no more the monopoly of the position. On the other hand now there is a symbiotic relationship and managers are no more the only power in the system. Alternately managers have to get things done and have to take up responsibilities. To this end they need the authority to carry on their role. Authority is different from power, although authority does give power to the manager. But even authorities are being challenged today and in today's workplace mere authority alone cannot provide the manager with the resources and co-operation needed. (Robbins, 2009)
So there is still confusion about the power authority and unity of command. In the ING system, is the regional office the beginning of the chain of command or is it also an authority? There is a question of its role. When something is questioned -- 'what do they do'? It can be inferred that they are not in authority. (Richard Ivey School of Business, 2008)
4. How Centralization and decentralization and formalization are used in organizational design
Divisions are created in the structure with autonomy in function given to each of the divisions. The divisions created are expected to fulfill a role that is assigned to that division. Thus the responsibility of the marketing division will be the entire marketing scenario of the company, and the divisional managers are responsible for achieving the perceived targets of the division in their area. Thus these divisional heads can focus on results and avoid duplication of activities and conserve resources. (Robbins, 2009)
The decentralization works well in a situation where the work can be carried on in a region without much supervision or where the cultural and geographic values necessitate a decentralized approach. On the other hand to a great extent, formal systems that contain a set of given activities and responsibilities are required to keep the system integrity and keeping it from ending in chaos. Thus a mixture of the flexible and the rigid has to be present in every organization. In the case of ING we can see that the company is based on a centralized model with the chain of command arising from its HQ and passing on to the regional offices and the national units. However there also appears to be in the system, maladjustment of the two.
II. Mechanistic and Organic Structures
1. Mechanic and Organic organizations
Of the types of structures of organizations, there are two basic types of concepts that are evident. Structures of organizations follow either the mechanistic pattern where job specialization is very high and with lots of departmentalizing and very rigid hierarchy smaller spans of control and a very long chain of command. On the other hand the organic structure pattern follows a path with a lesser degree of specialization, limited departments, and the managers have a wider span of control and decision making is not centralized but localized and has a smaller chain of command. (Gitman; McDaniel, 2008) ING has this quality more than the mechanistic pattern. There is high degree of job specialization and the products of the company in the financial sector are highly specialized and must also be attuned to the individual financial climate that prevails in each of the country where it operates.
2. Contingency factors that affect organizational design.
The immediate contingency is the market and the ability to bring about a competitive environment that provides better services or goods in the market. The system design have to have the requirements of the specialists and departments are created with a view to create a coordination and this is also used to over come geographic differences and the way the authority and decentralization can be achieved. It is not possible to create a system today that does not include a lot of specialists and divers personnel and high end technology. It is a confusing array of choices and a million complexities. (Daft, 2009)…[continue]
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