Contemporary Issues in HRM Practices

BUSS3106
Lecture 1. Traditional & Contemporary Organizational
Structures
 Introduction – The HRM
concept
• Human resource management (HRM) is concerned with all aspects of
how people are employed and managed in organizations.
• It covers the activities of strategic HRM, human capital management,
knowledge management, corporate social responsibility, organization
development, resourcing (workforce planning, recruitment and
selection and talent management), learning and development,
performance and reward management, employee relations, employee
well-being and the provision of employee services.
 What is an Organizational Structure
• A design that divides, groups, and coordinates job tasks in an
organization
• The organisational structure defines the organisation’s hierarchy of
people and departments as well as how information flows within the
organization.
• The organisational structure determines how and when information
is distributed as well as who makes what decisions based on the
information available.
 The importance of the Organizational
Structure
• Organizational structure is importance for evaluating employee
performance.
• The importance of organisational structure is particularly for better
commincation.
• The organisational structure also helps define the hierarchy and the
chain of command.
• Organization structure helps management in delivering good
decision
 5 Key elements of Organization Structure

• Five elements create an organizational structure:

• Job design, departmentation, deputation, management ratio and
hierarchy.
• These elements comprise an organizational chart and create the
organizational structure itself. The company's strategy of
managerial centralization or decentralization also influences
organizational structures.
 5 Key elements of Organization Structure

1. Job design: It defines the nature and job description of a particular position
2. Departmentation: It involves the grouping of jobs into departments to
facilitate the coordination of work.
3. Deputation: It means the power conferred to each employee and department
in the organization.
4. Management ratio: It refers to the number of employees that are reporting to
a supervisor.
5. Hierarchy: It creates various levels of authority arranged in the order of
delegated powers in the organization.
 Traditional Organizational Structure
• A traditional organizational structure were depicted with a chart, it would look like a
pyramid.
• At the top of that pyramid are the CEO, president and senior management.
• In the middle of the pyramid are middle managers and lower-level managers, and at the
broad base are employees.
• In this structure, the top level of the chart makes all the major decisions, which are
communicated to mid-level and low-level management. These managers must then
implement the decisions among the rank-and-file workers. Little to no input is required or
solicited from employees, and ultimate authority rests in the hands of those at the top of
the chart.
 Contemporary Organizational Structure
• In a contemporary organizational structure, the rigid top-down model of the
traditional structure is removed in favor of teams that work on projects together.
• Instead of relying on senior management to drive the work process, the
contemporary organizational design is all about empowering employees to make
decisions and implement changes without needing the approval of supervisors.
• In this type of structure, employees are given the requirements, milestones and
productivity goals of major projects, and must determine the most efficient way to
meet those goals.
• This structure eliminates the vertical design of a traditional company and gives
employees ownership of the work they perform.
 Traditional Organizational Structure
Advantages and Disadvantages
• The primary advantage of a traditional organizational structure is that it keeps
decision-making and authority in the hands of a few people within a business.
• In doing so it eliminates confusion among employees about who is in charge and
provides a clear message about what workers are expected to accomplish in the
performance of their duties. Every part has a specialized purpose, and those parts
are coordinated to efficiently create a predictable and consistent result.
• The major disadvantage of this structure is that it’s often an authoritarian system that
doesn’t give employees on the bottom-rung input into major decisions.
• Employees are expected to carry out orders, and their ideas for better ways to do
things are often disregarded.
 Contemporary Organizational Structure
Advantages and Disadvantages
• The main advantage of a contemporary organizational design is that employees
have the freedom to implement their own decisions, make changes and take
ownership of their work without interference from middle management and senior
management.
• This freedom can lead to increased productivity, greater work quality and a significant
uptick in employee satisfaction. Under this structure, employees form stronger bonds,
because they must rely on each other's expertise and talent to accomplish their goals.
• The primary disadvantage of a contemporary organizational structure is that the
absence of supervisory authority can lead to disorganization and inefficiency if
employees fail to hold each other accountable for mistakes.
 Traditional Vs. Contemporary (Features)
Traditional Contemporary

• Follows a pyramid structures, • Flat structure, no formal

with formal hierarchy hierarchy
• Simple & clear lines of • Matrix structure type authority
authority • Employee empowerment
• Bureaucratic and centralized based and decentralized
control control

• Slow and Inflexible to change • Highly Responsive & Flexible

to change
 Traditional Vs. Contemporary
Traditional Contemporary

• Team Structure
• Functional Structure
• Whole Foods Market, Inc. is structured entirely
• Revlon, Inc. is organized around the around teams. Each store composed of an
functions of operations, finance, average of 10 self-managed teams with a
human resources, and product designated team leader, and the team leaders in
research and development each store are a team -- called store team.
• Divisional Structure • Project Structure
• Wal-Mart Stores, Inc. is organized by • William Holding has no organizational
its divisions such as Wal-Mart Realty, departments or employee job titles. All work
Wal-Mart International, Wal-Mart activities are project based, and these project
Specialty Stores, Sam's Clubs, and teams form, disband, and form again as the
Supercenters work requires. Once the project is completed,
employees move on to the next one
 Examples of modern organizational
structures include:
• Matrix organizational structure: When following this structure, the
organization still has departments but creates project groups that include
employees from different departments. Employees working in this structure
may have two supervisors—a project manager and a functional or department
manager.
• Flat organizational structure: The organization removes the layers of
middle management between employees and executives, so this structure
suits smaller companies or early-stage start-ups. Here, employees receive
little supervision and have the power to form teams and choose which
projects to work on.
 Centralization
& Decentralization

Centralization is the
concentration of
authority for making
most decisions at the Decentralization is the
top levels of the dispersion of authority to
organization make decisions throughout
all levels of the organization
Visual Representation of Organizational
Structures
 Class Room Exercise

• Determine the kind of Organizational Structures of the following

local organization.
• STO • MNDF
• DHIRAAGU • MIRA
• SIMDI • IGMH
• MTCC
Thank You