Pia-n-abl

Organization Structure

INTRODUCTION An organization structure defines how job tasks are formally divided, grouped and coordinated. There are six key elements that must be kept in mind when organization structure is designed. These are as under: 1) Work specialization 2) Departmentalization 3) Chain of command 4) Span of control 5) Centralization and decentralization 6) Formalization A brief detail of above key elements is as under:

1) Work specialization It is the degree to which tasks in the organization are subdivided into separate jobs.

2) Departmentalization The basis by which jobs are grouped together is called departmentalization.

3) Chain of Command The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who

Organization Behavior

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Organization Structure Reports to whom.

4) Span of Control It

defines

the

number

of

subordinates

a

manager

can

efficiently and effectively direct in an organization

5) Centralization and Decentralization Centralization is the degree to which decision-making is concentrated at a single point in the organization. Decentralization is the degree to which decision direction is pushed down to lower level employees.

6) Formalization It is the degree to which jobs in the organization are standardized.

What is Organization Design? “A process for improving the probability that an organization will be successful.” More specifically, Organization Design is a formal, guided process for integrating the people, information and technology of an organization. Through the design process, organizations act to improve the probability that the collective efforts of members will be successful. Managers and members work together to define the needs of the organization then create systems to meet those needs most effectively.

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Organization Structure

Hierarchical Systems Most organizations today are designed as a bureaucracy in which authority and responsibility are arranged in a hierarchy. Within the hierarchy rules, policies, and procedures are uniformly and impersonally applied to exert control over member behaviors. Activity is organized within sub-units (bureaus, or departments) in

which

people

perform

specialized

functions

such

as

manufacturing, sales, or accounting. People who perform similar tasks are clustered together. The same basic organizational form is assumed to be appropriate for any organization, be it a government, school, business, church, or fraternity. It is familiar, predictable, and rational. It is what comes immediately to mind when we discover that ...we really have to get organized!

Organizing on Purpose The purpose for which a group exists should be the foundation for everything its members do — including the choice of an appropriate way to organize. The idea is to create a way of organizing that best suits the purpose to be accomplished, regardless of the way in which other, dissimilar groups are organized.

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Organization Structure

The Design Process Organization design begins with the creation of a strategy — a set of decision guidelines by which members will choose appropriate actions. The strategy is derived from clear, concise statements of purpose, and vision, and from the organization’s basic philosophy. Strategy unifies the intent of the organization and focuses members toward actions designed to accomplish desired outcomes. The strategy encourages actions that support the purpose and discourages those that do not. Creating a strategy is planning, not organizing. To organize we must

connect

people

with

each

other

in

meaningful

and

purposeful ways. Further, we must connect people with the information and technology necessary for them to be successful. Organization structure defines the formal relationships among people and specifies both their roles and their responsibilities. The process of organization design matches people, information, and technology to the purpose, vision, and strategy of the organization. Structure is designed to enhance communication and information flow among people. Systems are designed to encourage

individual

responsibility

and

decision-making.

Technology is used to enhance human capabilities to accomplish meaningful work. The end product is an integrated system of people and resources, tailored to the specific direction of the organization.

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Organization Structure

COMMON ORGANIZATIONAL DESIGNS The three most common organizational designs are described as follows:

1) THE SIMPLE STRUCTURE A

structure

characterized

departmentalization,

wide

by

a

spans

of

low

degree

control,

of

authority

centralized in a single person, and little formalization.

2) THE BUREAUCRATIC STRUCTURE A structure with highly routine operating tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command.

3) THE MATRIX STRUCTURE A structure that creates dual lines of authority; combines functional and product departmentalization.

NEW DESIGN OPTIONS Senior managers have been working to develop new structural options that can better help their firms to compete effectively. The three new structural designs are described as follows:

THE TEAM STRUCTURE The use of team as the central device to coordinate work activities. The primary characteristics of team structure are Organization Behavior

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Organization Structure that it break downs departmental barriers and decentralizes decision making to the level of the work team.

THE VIRTUAL ORGANIZATION A small, core organization that outsources major business functions.

THE BOUNDARYLESS ORGANIZATION An organization that seeks to eliminate the chain of command. Have limitless spans of control, and replace departments with empowered teams.

TWO EXTREME MODELS ORGANIZATIONAL DESIGN

OF

1) MECHANISTIC MODEL A structure characterized by extensive departmentalization, high

formalization,

a

limited

information

network,

and

centralization.

2) ORGANIC MODEL A structure that is flat, uses cross hierarchical and cross – functional

teams,

comprehensive

has

low

information

participative decision making.

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formalization, network,

and

possesses relies

a on

Organization Structure

FORCES THAT ORGANIZATIONAL DESIGN

INFLUENCE

STRATEGY Strategy and structure are closely linked. More specifically, structure should follow strategy. If management makes a significant change in its organization’s strategy, the structure will need to be modified to accommodate and support this change.

ORGANIZATION SIZE There

is

considerable

evidence

to

support

that

an

organization’s size significantly affects its structure. For instance, large organizations have more specialization, more departmentalization, more vertical levels, and more rules and regulations

than

do

small

organization.

However,

the

relationship is not linear. Rather, size affects structure at a decreasing rate. The impact of size becomes less important as an organization expands.

TECHNOLOGY The term technology refers to how an organization transfers its inputs into outputs. The routine technologies would be associated with a centralized structure, whereas delegated decision authority would characterize nonroutine technologies, which rely more heavily on the knowledge of specialists.

ENVIRONMENT Organization Behavior

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Organization Structure An

organization’s

environment

is

composed

of

those

institutions or forces that are outside the organization and potentially

affect

typically

include

the

organization’s

suppliers,

performance.

customers,

These

competitors,

government regulatory agencies and public pressure groups.

Article # 1:

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Organization Structure

Network Structure in Virtual Organization By: Mangu K.Ahuja Kathleen M.Carley Virtual organizations that use email to communicate and coordinate their work toward a common goal are becoming ubiquitous.

Much

prior

research

suggests

that

virtual

organizations, for the most part because they use information technology to communicate, will be decentralized and nonhierarchical. This paper examines the behavior of one such organization. The analysis is based on a case study of the communication

structure and

content

of

communications

among members of a virtual organization during a four-month period. They empirically measure the structure of a virtual organization and find evidence of hierarchy. The findings imply

that

the

communication

structure

of

a

virtual

organization may exhibit different properties on different dimensions of structure. They also examine the relationship among

task routineness,

organizational

structure,

and

performance. Results indicate that the fit between structure and task routineness affects the perception of performance, but may not affect the actual performance of the organization. Thus, this virtual organization

is similar to traditional

organizations in some ways and dissimilar in other ways. It was similar to traditional organizations in so far as task-

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Organization Structure structure fit predicted perceived performance. However, it was dissimilar to traditional organizations in so far as fit did not This research examines network structure of a virtual design organization using a social network approach. Specifically, this research has two objectives. First, it conceptually clarifies and empirically examines three distinct dimensions

of

emergent

network

structure

in

virtual

organizations. Second, following the literature on traditional forms of organization, we posit that in a virtual organization, the fit between task routineness and network structure is associated with superior network performance. We define a virtual organization as “a geographically distributed organization whose members are bound by a long-term common interest or goal, and who communicate and coordinate their work through information technology.” A key feature of virtual organizations is a high degree of informal communication. Because of a lack of formal rules, procedures, clear reporting relationships, and norms, more extensive informal communication is required. Thus, degree of hierarchy, centralization, and hierarchical levels

are

the

three

distinct

dimensions

of

structure

employed in this study. Degree of hierarchy is reflected by the degree to which relationships in a network are directly or indirectly reciprocal. Centralization reflects the extent to Organization Behavior

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Organization Structure which a network or group is organized around its focal point. An existence of hierarchical levels indicates that members must

go

through

someone

rather

than

directly

obtain

high

(low),

information from the source. Hypothesis:

In

a

virtual

organization,

organizational task routineness coupled with a high (low) degree of hierarchy, centralization, and hierarchical levels will be associated with high network performance. The results of this study indicate that virtual organizations can exhibit considerable hierarchical tendencies (degree, centralization, and multiple levels). This finding appears to contradict

the

predictions

of

non-hierarchical

and

decentralized structure in virtual organizations. The discussion leads us to a fundamental question -- to what extent

do

virtual

organizations

resemble

traditional

organizations? Previous researchers have argued that the difference

is

centralization,

largely

one

non-hierarchical

of

decentralization

versus

hierarchical.

versus They

found that this distinction is misleading. They found evidence of both centralization and hierarchy in a virtual organization. However, this structural form emerged in the communication structure and was not equivalent to an authority structure based on status or tenure differences. In many traditional organizations the centralization or hierarchy is in the authority structure and is related to status and tenure differences. In Organization Behavior

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Organization Structure other words, they found no evidence that the formal and informal

structures

in

the

virtual

organization

were

indistinguishable. Rather, this work suggests that in virtual organizations the decoupling of the authority structure and the communication structures results in a decoupling of power and information. They also found evidence that in this virtual organization, as in traditional organizations, the structure was matched to the task characteristics. However, unlike traditional organizations, this fit between communication structure and task improved the perception of performance but did not appear to improve objective performance. This suggests that the decoupling of the authority structure and the communication structures in the virtual organization may also result in decoupling subjective and objective performance. Whether such decoupling is beneficial to the organization remains an empirical question.

Article # 2 Organization Behavior

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Organization Structure

ORGANIZING By: Manfred Davidman This article gives comprehensive review in clear language about how to arrange matters so that people can work together effectively and well. It also contains much about what is needed to improve teamwork and co-operation, particularly in large organizations where many experts have to work together in teams. The writer discusses the role and responsibilities of managers in different circumstances. Also discussed the relationships between people at different levels and relationships between people and groups. The most outstanding section of the article is on functional relationships and that on co-ordination and co-coordinators, based on much experience and fieldwork. What an organization has to achieve requires work to be done in many different areas, requires much knowledge and experience, which is often highly specialized. Hence the work is divided among work units such as divisions, departments and groups. The work requiring to be done by the community is similarly divided into different areas such as industrial, educational, social, welfare, civil security and so on. Organization charts, a form of line diagram, show work units in relation to each other. Titles of managers are given, as are names of work units

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Organization Structure and of their managers. Such charts indicate the arrangement of work units and the delegation of work, which is the delegation of responsibility. Organization chart is used to illustrate: 1-The division of the company's work into work units (who does what); and 2-The reporting chain (who reports to whom). The organization chart is an extremely important tool for analyzing problems in organization and this means for analyzing day-to-day problems of management. The organization chart shows the division (allocation) of work and responsibility and the reporting chain. Workflow systems are a different matter and do not necessarily correspond to lines on an organization chart. The allocation of work and responsibility and consequent reporting are quite different from workflow and one should be careful not to confuse one with the other. An organization chart may emphasize which are the front-line departments at that particular point of time, which are supporting, which provide a service and which, if any, serve head office and the board. Front-line may be production or it may be selling and marketing, supporting may be the engineering division. Service divisions could be finance and personnel, while head office and the board may be backed by a corporate planning department.

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Organization Structure In an effective organization each work unit has to be responsible for, and carry out, a separate specialist function essential to the carrying out of the organization’s task. A direct work task is one, which is directly concerned with the carrying out of the work of the organization as a whole .An indirect work task is one, which is indirectly, concerned with the work of the organization as a whole. Large organizations require many experts to work together. They have to co-operate with each other if they are to succeed in doing their work effectively and well without endangering the community. In other words, large organizations require a participative style of management. The work of the manager in a participative setting is both tough and challenging. It is very much worthwhile for the necessary skills to be developed in managers, not only from the point of view of those who work in the organization but also from the point of view of the organization as a whole The importance of the role of the manager is underlined by the need to create a participative working environment and to manage in a way which serves not only the owners of the organization or those who control it but also the employees, the community in which his unit operates and the organization’s customers or clients.

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Organization Structure

PAKISTAN AIR LINES (PIA) PIA is leading airline not only of Pakistan but also one of

the

Famous airlines of the world. Basically it is a service concern Organization offering its services for the transportation of the people and cargo from one place to other within the country and outside the country. PIA head office is at Karachi airport. PIA started its regular services

from

May

10,1954.PIA

entered

the

world

of

international aviation with a service from Karachi to London in 1955.PIA starts making a profit until about the middle of 1956. In March 1960, PIA launched its first jet service (Boeing 707) on the London-Karachi-Dacca, route which later proved to be most successful. Operating revenues increased from 39% to 87.7% in 1962. Helicopters were added in fleet in 1963. Riding high on the crest of success, PIA became a household name in Pakistan in the mid sixties. The war between India and Pakistan during 1965 served as a catalyst for PIA as the national airline had an additional role to perform. It became first non-communist to fly to Republic of China. Commercial helicopter service was also introduced in East Pakistan in the same year. An IBM

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Organization Structure 1401, the first computer in Pakistan was installed in PIA in 1966. First batch of PIA trainee pilots completed their training program from PIA flying schools and received commercial pilot license in 1967.A full time chairman of the BOD appointed in 1974.PIA was rated for the most efficient airline for the hajj operations in 1982.Two women pilots were appointed in PIA in 1990. Nineties have also seen the expansion of PIA's massive Hajj and Umrah operations to Pakistan's smaller cities besides the operations from the major cities of Islamabad, Peshawar, Lahore, Quetta and Karachi. At present, PIA operates to 70 destinations (38 international and 37 domestic) in countries spread over 4 continents of the globe. There are 23,000 employees of PIA working all over the Pakistan and 200 employees in Multan. Following Departments of PIA are working in MULTAN: • Marketing • Sales and reservation • Cargo • Accounts • Admin • Communication • Security • Stores Organization Behavior

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Organization Structure • Engineering • Traffic • TGS (Technical Ground Support)

ANALYSIS With the consultancy of Ministry of Finance In PIA top management is responsible for the creation of organization structure. They think that structure serves as lifeblood and vital part of the organization. The criteria for the formulation of PIA structure are “to divide

organization

in

different

departments

and

each

department is subdivided in different sections for the smooth assignment of duties and responsibilities”. The structure they formulated is fully applicable. Tasks are subdivided into separate jobs and each individual is vital part to complete that task. It is collective job rather than individual. For the performance of these various tasks they require a combination of: • Highly skilled workers • Semiskilled workers • Untrained work force These

work

specialization

increase

the

efficiency

and

productivity because duties and responsibilities of all workers are specified even for unskilled workers duty register is updated on daily basis. Organization Behavior

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Organization Structure In PIA jobs are grouped together on the basis of: • Knowledge • Education • Experience. After the completion of jobs individuals and groups reports to their departmental head. Span of control in PIA is wide upto some extent as Duty Station Manager supervising 50 staff members in Multan efficiently and effectively, as it is usually stated that, the wider or larger the span, the more efficient the organization. Decision-making in PIA is associated with the hierarchical position, as power has been delegated to different authorities to make decisions for routine matter and they can consult the top management in any emergency and if the matter is beyond their discretion. Usually Duty Station Manager (DSM) takes decision but in case of extraordinary situation the hierarchy for the consultation goes like this: Duty Station Manager → Senior Manager → Director → GM Highly

formalized

rules

exist

in

PIA

as

duties

and

responsibilities of each individual are specified which makes it easy to pin point laxity of any individual. There are explicit job descriptions, lots of organizational rules, and clearly defined procedures covering work process in PIA.

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Organization Structure In PIA organization structure is simple because there is no complexity in hierarchical positions, wide span of control, highly formalized rules and regulations as it is shown in the organization chart of PIA. PIA neither

completely

follows

mechanistic model

nor

organic model of organization design because it is practical type of organization where duties and responsibilities are specified and if any dispute arises it is rooted out in coordination meeting of different departments, which held once in a month. Among the following four factors: • Strategy • Size • Technology • Environment That affect the organization structure, they think that only technology and environmental forces affect PIA’s structure. There is strongest relationship between technology and structure of PIA.It is one of the leading organizations of the Pakistan that immediately adopts the latest technology to take competitive position in the international market. Incorporation of technology in PIA is done as directed by centralized authority and this process of incorporation is done as prescribed by the rules and regulation, so we can say that

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Organization Structure there is also a strong relationship between technology and formalization. PIA is highly affected by following environmental forces: • Political • Economical • Religious PIA usually face static type of environment in a sense that: • Fixed arrival and departure of flights • Similarity in daily operations • Specified duties and responsibilities The simple structure and specified tasks of PIA staff gives them satisfaction which cause an increase in their performance and productivity and their performance can be graded as good due to this simple structure so we can say that structure affects employees performance. Formal Information channel exist in PIA, as information flow is either upward or downward. PIA quickly responds to acquire the technological advancement and international quality standards when and where they are required to face the existing intense global competition and it is done through direct supervision by management and positive interpersonal climate of PIA.

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Organization Structure

ALLIED BANK LIMITED (ABL) Allied Bank is the first Muslim bank established on the territory that became Pakistan, Established on December 3,1942 as the Australasia Bank at Lahore with a paid up share capital of Rs. 0.12 million under the Chairmanship of Khawaja Bashir Bux, the Bank had attracted deposits, equivalent to Rs. 0.431 million in its first eighteen months of business. Total assets then amounted to Rs. 0.572 million. Today, Allied Bank's paid up capital & reserves amount to Rs.565.7 million, deposits come to Rs.34 billion and total assets equal Rs.38 billion. The Allied Bank's story is one of dedication, commitment to professionalism,

adaptation

to

changing

environmental

challenges resulting into an all round growth and stability, envied and aspired by many. The Bank's history may be divided into several distinct phases. It began life as a Lahore based Muslim bank in a financial

world,

which

was

predominated

by

other

communities. Experience gained during this period proved to be of great benefit in enabling the Bank to impart financial

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Organization Structure knowledge and develop banking expertise at a time when Pakistan suffered from a severe shortage of these skills. During 25 years of united Pakistan the Bank advanced forward in all areas of its activities. The 1970s was a difficult decade for all Pakistani banks. In 1971 the eastern part of the country was separated. Australasia Bank lost more than 50 branches and deposits worth Rs. 54.444 million. Nevertheless, growth remained steady and by the close of December 1973, assets had risen to Rs. 1.25 billion and deposits to Rs. 849 million. On 1st January 1974 all the scheduled banks, including Australasia Bank, were nationalized. Three small provincial banks were merged into Australasia Bank and on 1st July 1974, the new entity was renamed as the Allied Bank of Pakistan Limited. Allied Bank began its operations as a public sector financial institution. During the 17years(1974-1991) the value

of

total

net

Rs.24.4billionanddepositstooverRs.21,

assets 3

rose

billion

with

to 747

branches network (Figures are for 10-09-1991, the date the Bank was privatized).

BRANCH NETWORK NUMBER OF BRANCHES IN REGIONAL OFFICES REGIONAL OFFICE KARACHI: HYDERABAD: SUKKAR: ISLAMABAD: LAHORE:

Organization Behavior

BRANCHES 104 59 34 101 67

23

Organization Structure MULTAN: SIALKOT: BAHAWALPUR: FAISALABAD: GUJRANWALA: SARGODHA: PESHAWAR: MARDAN: MIRPUR (AZAD KASHMIR) : ABBOTTABAD: QUEETA: Total Branches:

Departments Following departments are working in ABL: 1) Deposit department 2) Clearing department 3) Cash department 4) Remittance department

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63 42 39 69 36 35 61 32 56 22 36 855

Organization Structure

ANALYSIS In Allied Bank Limited (ABL) top management is responsible for the creation of organization structure. They think that structure is important for the smooth operations of business. The criteria for the formulation of ABL structure are specified under the guidance and instructions of State Bank of Pakistan. The structure they formulated is fully applicable in the organization. In ABL, Tasks are subdivided into separate jobs and each individual is doing a part of an activity rather than entire activity. For the performance of these various tasks they require a combination of: • Highly skilled workers • Semiskilled workers • Untrained work force They claim that work specialization increase the efficiency and productivity of workers. In ABL jobs are grouped together on the basis of: • Knowledge Organization Behavior

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Organization Structure • Experience. After the completion of jobs individuals and groups reports to their departmental head. Span of control in ABL is moderate. A manger can control medium number of people efficiently and effectively. Decision-making in ABL is decentralized as power has been delegated to different authorities to make decisions for routine matter and they can consult the top management in any emergency and if the matter is beyond their discretion. Formalized rules exist in ABL that directs employee and managers. Management and subordinates work with team spirit to perform their duties and develop the structure. In ABL organization structure is simple because there is no complexity in hierarchical positions, medium span of control, formalized

rules

and

regulations,

and

low

degree

of

departmentalization, as it is shown in the organization chart of ABL.The strength of this simple structure lies in its simplicity. It is fast, flexible, inexpensive to maintain, and accountability is very clear. From the prevailing new design options ABL is following one of them and i.e. ‘team structure’. It means that organization is using teams as the central device to coordinate work activities and this team structure breaks down departmental barriers and decentralizes decision making to the level of work team. Organization Behavior

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Organization Structure ABL

neither

completely

follows

“Organic

Model”

nor

“Mechanistic Model” of organization design meaning that ABL’s structure has characteristics of both the models. Among the following four factors: • Strategy • Size • Technology • Environment That

affect

the

organization

structure,

they

claim

that

technology and environmental forces affect ABL’s structure whereas change in strategy rarely affects the structure. There is stronger relationship between technology and structure of ABL because without the telecommunication sources like fax, e-mail, phone, and the operations of branch become difficult. From the following environmental forces: • Suppliers • Customers • Competitors • Government regulatory agencies • Public pressure group • Introduction of new technology Organization Behavior

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Organization Structure

The customers potentially affect the organization structure.

The simple structure and formalized rules of ABL makes it convenient for the workers to complete the job tasks, which have positive impact on employee’s performance. Formal Information channel exist in ABL, as information flow is either upward or downward. By using latest technology with skill the organization structure of ABL is able to meet the global requirement with indirect supervision and positive interpersonal climate.

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Organization Structure

COMPARISON The theme of this report is that an organization’s internal structure contributes to explaining and predicting behavior and regulations. The structural relationships in which people work has an important bearing on employee attitudes and behavior. The organization structure reduces ambiguity for employees and clarifies such concerns as: • “What am I supposed to do?” • “ How am I supposed to do it?” • “To whom do I report?” and • “To whom do I go if I have a problem?” It shapes their attitudes and facilitates and motivates them to higher levels of performance. After analyzing the organization selected for our studies in order to know that what type of structure is in practice and what is its impact on employee’s performance and behavior. In

both

the

organization:

PIA

and

ABL,

the

major

responsibility for developing the organization structure goes to top management, However, in PIA “Ministry of Finance” directs the implementation of rules as well as specifies Organization Behavior

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Organization Structure structural guide lines, & in ABL the formulation of structure is under the guidance and instruction of “State Bank of Pakistan” which clarifies the hierarchical position in the organization chart. Both the organizations are fully aware about the importance of structure and its positive impact on employee’s behavior and performance, as it is necessary for the survival of each and every organization. That is why the structure specified by the top management is fully applicable in both the organization. From the following designs of organization structure: • Simple structure • Bureaucratic structure • Matrix structure They think that “simple structure” is most suitable for the organizations because:  It is easy to implement  No complications  Authority and responsibility is clear and delegated to

each

person

according

to

their

work

specifications, which leads to smooth operation of business without any ambiguity.  Wide span of control  Low degree of departmentalization

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Organization Structure

CONCLUSION After analyzing both the organizations we come to know that though they said the structure they are following is “simple structure” but they have characteristics of both the • Simple structure • Bureaucratic structure The basic difference between both the organizations is in ABL different work teams are also there to accomplish certain tasks.

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Organization Structure

BIBLIOGRAPHY

→

Syed Hashmat-ullah Shah Deputy Station Manager PIA Ph: 9200398 Res: 514161

→

Akhtar Khan AVP Circle Office ABL

Sites visited  http://www.yahoo.search.com  http://www.msn.search.com  http://www.google.com

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Organization Structure  www.article911.com  www.harvard.edu.com  www.articles.com  www.A2Z.COM  www.emerald-library.com  www.emerald-insight.com

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