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Restructuring And Downsizing in

OD

Presented By:
Venkatesh.L.Nadar (07bs4787)
N.Rakesh (07bs2382)
Contingencies Influencing
Structural Design
Environment

Organization Worldwide
Size Structural Operations
Design

Organization
Technology Goals
Functional Organization
The Functional Form
Advantages Disadvantages
 Promotes skill • Emphasizes routine
specialization
tasks; encourages
 Reduces duplication of
scarce resources and short time horizons
uses resources full time
• Fosters parochial
 Enhances career
development for perspectives by
specialists within large managers and limits
departments capacity for top-
 Facilitates communication management
and performance because
superiors share expertise positions
with their subordinates
 Exposes specialists to • Multiplies
others within same interdepartmental
specialty dependencies;
increases
coordination and
The Divisional Organization
The Divisional Form
Advantages Disadvantages
Recognizes • May use skills and
interdepartmental resource inefficiently
interdependencies
• Limits career
Fosters an orientation
toward overall outcomes advancement by
and clients specialists
Allows diversification and • Impedes specialists’
expansion of exposure to others
skills/training within same
Ensures accountability by specialties
departmental managers • Puts multiple-role
and promotes delegation demands upon people
Heightens departmental and creates stress
cohesion and
involvement in work • May promote
departmental
The Matrix Organization
The Matrix Structure
Advantages Disadvantages
 Makes specialized, • Can be difficult to
functional knowledge implement
available to all projects • Increases role
 Use people flexibly ambiguity, stress,
and anxiety
 Maintains consistency by • Performance is
forcing communication lowered without
between managers power balancing
 Recognizes and provides between projects
and functions
mechanisms for dealing
with legitimate, multiple • Makes inconsistent
sources of power demands and can
promote conflict and
 Can adapt to short-term crisis
environmental changes orientation
• May reward political
The Process-Based Structure
Characteristics of
Process-Based Structures
• Processes drive structure
• Work adds value
• Teams are fundamental
• Customers define performance
• Teams are rewarded for performance
• Teams are tightly linked to suppliers and
customers
• Team members are well informed and trained
The Process-Based Form
Advantages Disadvantages
Focuses resources on • Can threaten middle
customer satisfaction managers and staff
Improves speed and specialists
efficiency
Adapts to environmental • Requires changes in
change rapidly command-and-
Reduces boundaries control mindsets
between departments • Duplicates scarce
Increases ability to see
total work flow resources
Enhances employee • Requires new skills
involvement and knowledge to
Lowers costs dues to manage lateral
overhead relationships and
teams
• May take longer to
make decisions in
The Network Organization

Designer Producer
Organizations Organizations

Broker
Organization

Supplier Distributor
Organizations Organizations
The Network-Based Form
Advantages Disadvantages
 Enables highly flexible • Difficulty managing
and adaptive responses lateral relationships
 Creates a “best of the across autonomous
best” firm to focus
resources on customer organizations
and market needs • Difficulty motivating
 Each organization can members to relinquish
leverage a distinctive autonomy to join
competency
network
 Permits rapid global
response • Sustaining membership
 Can produce and benefits can be
“synergistic” results problematic
• May give partners
access to proprietary
DOWNSIZIN
It is a set of G
activities
undertaken on part
of the
management and
designed to
improve
organizational
Downsizing Tactics
Why Downsize
Declining Profits
Business downturn or increased pressure from
competitors
Mergers and acquisitions
Introduction to new technologies
Reduce operating costs
Decrease levels of management
Getting rid of employee “Deadwood”
DOWNSIZING INTERVENTIONS
 Clarify the organization’s strategy
 Assess downsizing options and making
relevant choices
 Implement the changes

 Address the needs of survivors and those who


leave
 Follow through with growth plans
THE SURVIVORS
Reactions
• Negative Attitudes and behaviors
• Reduced performance capabilities
• Lower organizational Productivity
• Anger
• Anxiety
• Resentment
THE DELTA
DIFFERRENCE
Delta Airlines – A CASE STUDY
 3rd largest US airline
 Industry pushed over the edge post 9/11

 Major US carriers cut costs by $14B

 Over 70,000 or 16% of workforce was laid off

 267 aircrafts were grounded


“ ALL AIRLINES
ARE ALIKE, IT’S
PEOPE THAT
MAKES DELTA
DIFFERENT.”
Downsizing efforts at Delta
 Direct dealing between employees and
management
 HR dept was outsourced

 A Core team was setup led by the CLO

 A war room was setup

 Build a workforce reduction program to manage


crisis
 DWP – a set of 3 programs
Enhanced early retirement
Leave of absence
Severance
 Employees provided with 6 voluntary programs – 1-
5 yr leave programs
 Added flight privileges, pension credit time and
ability to bid for their jobs while on leave
 Intended to keep connectivity of employees

 Involuntary severance program also created

 98% of employee reduction created through


voluntary leave program
 Open to apply to other positions
Change Management
 Tools were developed to assist managers to
evaluate their process, job designs and
organization structures
 Identify and implement changes in
management with reduced staff levels
 Training programs

 New ‘LEADER - LED’ communication strategy

 HR being viewed as a support area

 Websites
THANK