Restructuring Organizations

Presented By: Anuja Sahay -8 Ashok Ponala -11 Deepika Harpalani -18 Farhanaz Sheikh -21 Jinal Ganatra -27 Sarada Hazra - 56 Seema Pawar -58 Tushar Baghele

Functional Divisional Matrix Reduce cost and bureaucracy by decreasing the size of organization

Process Network

Redesigns the organization's core work process to give tighter linkage and coordination among the different tasks

Functional Structure
Managing Specialists Under the group. Most widely Used Structure. Divided into functional department oriented to specific Functions , Regions & Products.

Functional Structure

Advantages Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations In-depth specialization.

Examples :- Pfizer Pharma.

Functional Structure

Advantages More effective and efficient handling of specific regional issues that arise Serve needs of unique geographic markets better.

Example :- Indian Railways.

Functional Structure

Advantages Customers needs and problems can be met by specialists.

Example :- L & T.

Divisional Restructuring
The divisional structure groups each organizational function into a division. Each division within a divisional structure contains all the necessary resources and functions within it.

Examples
Demerger of the cement division of Larsen and Toubro Ltd. (L&T), named Ultratech Cement Ltd.

Siemens Limited
Business segments of Siemens Ltd were in power, communication, medical solution, industrial automation, and railway and transport systems. In 1994 product divisions were further subdivided to achieve operational efficiency. The number of business divisions was increased to ten

 Despite many changes and repeated divisional restructuring, the company could not get the desired result to counter all-time competition. Manpower Downsizing Financial Restructuring Restructuring of Processes Personnel Division

Matrix Structure
It combines functional and Divisional approaches to emphasize project or program Organization structure in which teams are formed and team member report to two or more managers. Matrix structure rely heavily on committee and team authority.

The Matrix Structure

Advantages of Matrix Structure

Better Co-operation across functions. Increased Flexibility Better Customer service and Decision making Better performance accountability Improved strategic management

Process Structure
Process structure is the horizontal approach where instead of organizing along the product or function, the organization is structured along the key processes. A set of related task and activities that work together in a predetermined sequence to transform inputs into user consumable outputs.

Strengths
      Strong customer orientation Rapid response Encourages teamwork Most Effective High customer orientation. Non-routine task.

Weakness
 Identification of core process.  Threatens middle management.

Downsizing

Downsizing may occur when: One company merges with another One divisional unit merges with another A product or a service is cut Employees are laid off from an Organization

Application Stages
Clarify the Organization s Strategy Assess downsizing options and make relevant changes Implement the Changes Address the needs of survivors and those who leave Follow through with Growth plans

Downsizing Delta Air Lines

Bad Industry Fundamentals Decreased Profit margin Volatile Fuel Prices. 9/11 forced US Airline Firms to layoff a chunk of their workforce

 Early Retirement Schemes. Leave programs of Different Timelines. Flight Privileges & Pension Credit for leave period. Ability to bid for jobs on leave. Forced layoff plans were also developed

 The exercise ended with 4 week implementation phase. 98% opted for voluntary leave programs. Many of them were re-employed in the company later on. Others are still connected to the organization via Web Connects.

In 2005 GM was about to go bankrupt, if the company failed to stop its cash-burn rate of $2 billion a quarter. Some experts predicted that the company might choose to restructure and eliminate nine factories with 30,000 workers over three years.

Result of down sizing

Result of downsizing is mostly negative. Downsizing creates a problem at the individual level including increased stress and illness, loss of self esteem, reduced trust and loyalty, and marriage and family disputes. Result of downsizing on financial performance is also negative. The reason they fail is that layoffs are usually followed by a host of unintended consequences, consequences that can make matters worse not better.

Re-Engineering
Also called Process redesign The radical redesign of business processes, organizational structures, information systems, and values of the organization to achieve a breakthrough in business results For example, to: Reduce delivery time Increase product and service quality Improve customer satisfaction Increase revenues and profitability

Trigger for Ford s AP Reengineering

Mazda only uses 1/5 personnel to do the same AP. (Ford: 500; Mazda: 5) When goods arrive at the loading dock at Mazda:
Use bar-code reader is used to read delivery data. Inventory data are updated. Production schedules may be rescheduled if necessary. Send electronic payment to the supplier.

Ford Accounts Payable

Before
More than 500 accounts payable clerks matched purchase order, receiving documents, and invoices and then issued payment. It was slow and cumbersome. Mismatches were common.

After
Reengineer procurement instead of AP process. The new process cuts head count in AP by 75%. Invoices are eliminated. Matching is computerized. Accuracy is improved.

New Life Insurance Policy Application Process at Mutual Benefits Life Before Reengineering*
Department A Step 1 Department A Step 2

....

Issuance Application

Mutual Benefits Life Before Reengineering*

Department E Step 19

Issuance Policy

30 steps, 5 departments, 19 persons Issuance application processing cycle time: 24 hours minimum; average 22 days only 17 minutes in actually processing the application

The New Life Insurance Policy Application Process Handled by Case Managers

Mainframe

Underwriter

Physician

Case Manager
PC Workstation

LAN Server

application processing cycle time: 4 hours minimum; 2-5 days average Application handling capacity double Cut 100 field office positions