Organisational Structure and Design- BBA/MBA Note

Posted on Jun 3 2020 - 6:11pm by admin

(g) Team Based Organisation

A team is a small group of individuals with unique features.
Characteristics of a team:
(i) A team consists of small number of people.
(ii) It consists of people with complementary skills to get the things done.
(iii) A team has common purpose and performance goals which sets the direction of the team.
(iv) A team evolves a common approach which is followed b team members in true spirit.
(v) A holds itself mutually accountable for results, rather than merely meeting a manager’s demands for results.

In recent years, more and more organizations have put emphasis on creating teams for better organizational performance. Teams are more viable options for better organisational performance. The importance of teams can be seen in terms of enhanced performance, employee benefits, reduced costs and organizational enhancements.

(h) Free-form Organisation

Free form organisation, also known as naturalistic, organic or ad hoc organisation, is based on the premise that the organisation is an open system and the basic task of a manager is to facilitate change in the organisaiton.
Bennis observes that free-form organisation is “a rapidly changing, adaptive, temporary system organized around problems to be solved by groups of relative strangers with diverse professional skills.”

Free-form organisations are suitable for those industries which have to work in highly dynamic environments. Such environments are characterised by high flexibility and ever-changing character. To be successful in such an environment, the organisations are required to put more pressure on information processing, quick decisions, and independent status to the various units which are directly exposed to the environment. Apart from the environmental pressure, there is another reason for adopting free-form of organisation, and that is the democratic values of the society. The democratic values put more emphasis on equality and de-emphasis on boss-subordinate relationships. In free-form organisations, both these things are possible. However, to some degree, all the organisations place some emphasis on change and realisation of individual satisfaction in the organisations but they may not be following the basic theme of the free-form organisations. Two recent developments in the category of free-form organisations are virtual organisation and virtual office.
Free-form structures reduce the emphasis on positions, departments, and other formal units, and on the organisational hierarchy. Forrester even suggests that in free-form organisation, the traditional man-boss relationship disappears. He has emphasised that profit centres rather than functionally-divided budgetary units should be major entities. Profit centres place all contributions to an integrated single unit with unified goals so that all gain or lose by the results. Such a system can be managed as a team or a cohesive group, but its organisation structure would be fluid and dynamic.

Virtual Organisation

The concept of virtual organisation or corporation along with virtual team and office has entered management field very recently. Virtual organisation is also known as networked organisation as Its various components are linked through communication network only. The literal meaning of virtual is having the efficacy without the material part; unreal but capable of being considered as real for the purpose.

Virtual corporation is a temporary network of independent companies – suppliers, customers, even erstwhile rivals- linked by information technology to share skills, costs and access to one another’s markets. It will have neither central office nor organisation chart. It will have no hierarchy, no vertical integration.

Thus, virtual organisation is a temporary alliance between two or more organizations that band together undertake a specific venture.

Features of Virtual Organizations

1. Technology
Informational networks will provide far-flunged companies and entrepreneurs to link up work together from start to finish. The partnerships will be based on electronic contracts to keep tire lawyers away and speed the linkups.

2. Opportunism
Partnerships will be less permanent, less formal, and more opportunistic. Companies will band together to meet a specific market opportunity and, more often than not, tall apart once the need evaporates.

3. Excellence
Because each partner brings its core competence to the effort, it may be possible to create a best-of –everything organisation. Every function and process could be world class- something that no single company could achieve.

4. Trust
These relationships make companies far more reliant on each other and require far more trust than even before. They will share a sense of co-destiny, meaning that the fate of each partner is dependent on other.

5. No Borders
The new corporate model redefines the traditional boundaries of the company. More cooperation among competitors, suppliers, and customers makes it harder to determine where one company ends and another begins.

Virtual Office

Along with virtual organsaitions, the concept of virtual offices has also emerged. Office automation has led to the development of virtual office concept. A virtual office works just like a physical officer but devoid of physical space and facilities. Employees interact with others through portable communication tools, such as electronic mail, cellular phone, thinkpad, voice mail system, laptop computer, fax machine and audio/video conferencing system. Employees armed with these tools can perform their work from any place-their homes, cars, restaurants, airports, customer’s offices and so on. These electronic communication tools allow organisations to greatly reduce the office work needed for each employee, sometimes, enabling them to replace dozens of desks with a single ‘productivity centre’ that the employees can use for holding meetings and accomplishing other short-term tasks.


1. Reduced Facility Cost
Virtual office enables an organisation to reduce its cost that is required in setting up a physical office. Instead of having a large physical office, the organisation can reduce its size considerably as many employees work for office without attending it physically. This helps in reducing real estate cost, maintenance cost, and cost of physical commuting of employees.

2. Reduced Equipment Cost. A physical office requires equipment to be used by employees while working in the office. In a virtual office, no such equipment is required. What is required is the development of local area network through which employees are connected. This arrangement is more relevant for information workers. For other categories of employees, other electronic communication tools are required.

3. Emphasis on Formal Communication. A virtual office places emphasis on formal network of communication which ensures the orderly flow of communication throughout the organisation. This further ensures that only officially-relevant communication passes through the network unlike the physical offices in which much time is wasted in informal communication without much meaningful exchange of ideas and thoughts.

4. Reduced Work Stoppages. A virtual office can work even during some tolerable events which may hamper the work of physical offices, such as storms, hurricanes, floods, etc. Since the employees are not required to attend the office physically, they can continue to work during such events.

5. Social Interaction and Social Contribution
A virtual office enables employees to engage in social interaction as they can save time because of absence of physical commuting which otherwise consumes lot of employees’ time. Similarly, a virtual office enables those persons to work who might not be in a position to attend office physically, such as handicapped people, elderly people, parents with young children, and so on.


1. Lack of Belongingness
In a virtual office system, employees are not able to develop sense of belongingness among each other as well as with the organization. They never treat themselves as members of the organisation or members of a team for which they are working. Because of lack of belongingness, employee turnover rate tends to be higher. This is detrimental to the organisation concerned.

2. Psychological Fear of Job Loss
Employees working in a virtual office, generally develop a psychological fear of losing their job as a feeling is created in their mind that they are not indispensable for the organisation. Persons having similar knowledge can replace them much more easily than is the case with a physical office. This psychological fear lowers their morale which ultimately leads to lower productivity.

3. Family Tension
Though it appears to be unconvincing but the fact is that a virtual office system creates family tension. Families which are accustomed of seeing elder members going office in the morning and coming in the evening, hardly reconcile with the view that these members remain in die home during office hours. This feeling starts creating family tension.
Apart from this, family tension created by other factors leads to lower productivity among virtual office workers.

Measures for Making Virtual Offices Effective

1. Providing Computer Resources
Virtual office working revolves around computer resources. These resources must by provided by the employing organisations. While providing these computer resources, it must be ensured that these are commensurate with the requirements of the employees concerned.

2. Providing Access to Information
Adequate provisions must be made to enable employees to have easy access to information which they need. As the society is becoming increasingly information-oriented, employees’ access to relevant Information is a pre-requisite for successful operation of virtual offices.

3.Arrangement for Forwarding Phone Calls
Every virtual office requires some sort of help from a physical office. Malting arrangement for forwarding phone calls to concerned employees is one of these helps. Therefore, there should be someone at the fixed office with the responsibility for forwarding phone calls to telecommuters. Organisation can also make use of a voice messaging system that enables the telecommuters to access it from their own workplaces.

4. Arranging Conference Calls
A conference call enables more than two persons to participate in a telephonic conversation at the same time. This helps the telecommuters to exchange their views and ideas among themselves without meeting physically. Such views and ideas are quite helpful in solving those problems that cannot be solved individually. In order to take file advantage of this phenomenon, the organisation should arrange conference calls at regular intervals.

5. Arranging Regular Meetings
Though in virtual office systems, face-to-face meeting among employees may not be required to do their work technically, it is better that they meet their fellow workers on certain pre-determined time at regular intervals. Such meetings help them in understanding each other in a much better way and develop belongingness and community feeling. Therefore, the organisation should make arrangement for such meetings and informing all the concerned telecommuters.

6. Follow-up of Work Routine
Telecommuters should be encouraged to develop and follow their own work routine so that their attention is not distracted during their working hours. If the telecommuters develop and follow such a work routine, perhaps, their family members, friends, and others may hesitate in disturbing them during their working hours even at home or any other place.

7. Objective Evaluation of Work Performance
The organisation should develop some objective criteria for the evaluation of work performance of telecommuters. As far as possible, these criteria may be in quantitative form so that the work performance can be measured precisely against these criteria. Wherever work performance measurement criteria cannot be quantified, these may be developed in qualitative form with precise definition of each qualitative criterion. After finalizing work evaluation criteria, these should be communicated to telecommuters so that they are very clear about what the organisation expects from them This may infuse a kind of discipline among telecommuters that is beneficial to them as well as to the organisation.

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