7th BALKANMINE CONGRESS – Proceedings, Prijedor 2017

DOI: 10.7251/BMC170701343A

DYNAMIC MODELING OF ORGANIZATIONAL STRUCTURE IN THE

CONTEXT OF HUMAN RESOURCES OPTIMIZATION

Milorad ANDŽIĆ1, Lazar STOJANOVIĆ2

1
Comsar energy Republika Srpska Ltd.Banja Luka, m.andzic@comsar.ba
2
University of Banja Luka, Faculty of Mining Prijedor, Email: lazar.stojanovic@rf.unibl.org

ABSTRACT

Dynamic modeling of organization that supports qualitative management of a company’s resources

requires development of a client-oriented organization structure that should respondto complex
valuative requirements of interested parties (stakeholders). Stakeholders’ satisfaction factors are
numerous, but in the center of the scene there is always a man as the creator and beneficiary of this
value. In a complex business environment, requirements of stakeholders demand for business response
that is market acceptable, fast, correct, and in compliance with standards. Market acceptance of
products or service and stakeholders’ requirements are the subject of a continuing adjustment of the
organizational structure and employees as the carrier of knowledge and skills needed to execute job
tasks that result from the purpose of the very existence of the company. This work presents a practical
framework for organization of a company that came out as an answer to insecure and inconsistent
legal frame for effective management of a company, as well as a desire to offer to companies modern
tools, know-how and solutions to dynamic optimization of organizational structure in accordance with
international standards.

Key words: Dynamic model, processes, resources, organization, objectives, optimization, plan, and
Key Performance Indicators (KPI).

1. INTRODUCTION

Law is binding up an employer, which employs more than 15 employees, to normatively

regulate employment and thus establish organization of work posts as a base that enables him
to meet the legal frame for regulation of relations between an employee and employer.
Companies tend to turn to normative regulation of relations with an employee by adopting the
following documents: Employment Rule Book, and Organization and Work Posts’
Systematization Rule Book. Organization and Work Posts’ Systematization Rule Book
usually establishes a functional organizational structure that through functional organizational
parts treats ‘work posts’ as the lowest functional organizational units (OU). Job tasks that an
employee should execute i.e. do are usually distributed to the work post. To recruit a vacant
work post, certain performances are required from an employee in order to do the job tasks
distributed to this work post. Recruitment of the work post is done by an employment
contract, which explicitly states that the employee is assigned to a certain work post defined

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by Organization and Work Posts’ Systematization Rule Book. Work posts are an integral part
of an organization, and the human resources, as the carriers of knowledge and skills, are
treated as executors of job tasks of work posts under conditions and time limit as agreed in the
employment contract. At first sight this model contains important elements of organization,
but the problem arises when the business environment requests quick adaptation of
organizational structure of a company. This means that any slightly more significant addition
or deduction of job tasks that an employee should perform within his/her competencies would
imply adaptation of provisions of Organization and Work Posts’ Rule Book. If we add to this
a request to transfer an employee from one OU to another, the situation becomes additionally
complicated. To support such requested adaptations in job description of the employee and
the transfer from one OU to another, it is necessary to amend internal regulatory documents
that regulate this area. Procedure to alter and amend internal documents is complicated and
time consuming. We may freely say that such ‘usual’ model of organization is inflexible and
static.
Addition or deduction of job tasks from an employee requires change of job description in the
organization rule book. un adapted rule book creates a legal insecurity both for employer and
employee. it becomes a source of frustrations that often escalate and end at court. the epilogue
of the court procedure is usually for the benefit of the employee. this is because the company
has no internal legislation that would support a demanding organizational flexibility. when
generally observing the usual model of organization at any company, the following questions
arise: how to integrally and optimally manage resources of a company? how to create a
flexible organization of a company’s business resources? how to meet requirements of
stakeholders [1]? how to measure success of a company’s organization?
The aim of this work is to publish solutions that originated in practice as a compromise
between requirements of the lawmaker that prefers a social liberal political system on one
side, and a company that has to continuingly optimize its resources in the selfless fight to
survive on the other.

2. MODELING COMPANY’S ORGANIZATIONAL STRUCTURE

It is clear that every company is made with some purpose, or rather ‘mission’, and that led by
certain values, it recognizes certain strategic objectives through its vision. Map of strategic
objectives is articulated by a strategic plan, out of which again tactical and operational plans
with their specific objectives come out. It is evident that a company, in accordance with its
business model,has to plan, engage, then organize needed resources, and through process
activities achieve results that will more or less meet the expectations of stakeholders in order
to accomplish corporate objectives.

2.1. Modeling business processes

Map of organizational structure is based on business model and strategy, and it begins with
‘General process model’, i.e. with business processes modeling(BPM) [2].There is the most
common classification of processes into three main groups i.e. macro-processes: Management
processes, Realization/Operating processes, and Support processes[3].Every macro-process
has its own processeswhich include certain tasks as sub processes of processes, simply named
individual processes [3]. Further division of tasks to activities and operations is not the
subject of this work. Key postulate is that certain processes, i.e. tasks demand for certain
resources in order to be carried out. The question is who is primarily responsible for mapping

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these processes and by that itself for defining resources needed to reach the key performance
indicators (KPI) [4,5]? Who can be that person? This person is someone with an adequate
knowledge of the process. This answer leads us to conclusion that we need two key resources:
person and knowledge. It is evident that the knowledge as the resource is limitless, but the
person has limited knowledge and time, as the third resource. Therefore, we need more
persons with certain specialist knowledgewho would assume authority and responsibility to
design the process and at the same time assume the role of ‘the process owner’ [6]. ‘Process
owner’ creates process documents, organizes the method of validation and measuring of
process objectives through validation and measuring of process tasks. General process model
represents the general map of business activities that arise from the business model and the
management of macro-processes falls into exclusive authority of the company’s general
manager. The general manager delegates rights and responsibilities to design individual
processes by designating ‘process owners’. The process owner does not have to be a
company’s employee. It can be any ‘outsource’ person.
Process owner breaks down a process to individual tasks, then forms a catalogue of tasks,
assesses the relative value of each task in accordance with criteria for task valuation, estimates
duration of tasks, and determines competencies that are required to perform the task.
What is left at the end is to redistribute the tasks through functional organizational parts i.e.
Organization Units (OU) to work posts (WP) as the simplest OU. Therefore, the functional
organizational structure needs to be modeled.

2.2. Modeling functional organizational structure

Usual model of organizational map is a functional organization that gets distributed depthwise
and withwise into functional OU. Such ‘standard’ model of organizational map may be
establishedin divisional and territorial principle with adjustment of depth and width to
corporate requirements. The final instance of a functional organization is a work post (WP) as
the lowest functional organizational form.
By intercrossing the OU, including WP, with processes i.e. tasks we get Process-functional
organizational structure i.e. Model of matrix organizational structure [7].

2.3. Matrix organizational structure

Matrix organizational structure (example Figure 1) offers a compromising solution for

organization and redistribution of tasks to OU that on one side provides process knowledge
and process authority (process owner), and on the other functional authorization (manager of
OU) to organize execution of tasks distributed to OU. The manager of OU has the authority to
redistribute the tasks to work posts in accordance with corporate requirements and market
demands.
Prevalence of tasks distributed to a work post determines the functional title of the work post
and required competencies to perform the mentioned tasks. The method of determining the
title of a work post and required competencies to perform the tasks is not the subject of this
work. Therefore, we shall move on to the area that deals with planning an organizational
structure.

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CORRECTIVE MEASURES UNDERTAKE

MEASURING KPI REALIZATION FOR OU, PROCESSES AND EMPLOYEES

REALIZATION OF BUSINESS GOALS AND TASKS

PLANNING OF GOALS AND TASKS

Functional organizational part

X marks that in the specified

Sector' of outsource tasks

Power generation sector

Exploitation department
Coal production sector

Transport department
functional organizational part,

Project 'Sector'
Deaprtment 1...

Department 2...

Support sector
certain tasks are carried out, which

Administration
DIRECTORATE

Procurement
Maintenance
Warehouse

Project 1
Project 2
the owner of the process should
recognize and delegate to the
manager of OU, and then the
manager of OU should redistribute
these to the WP

Prcess title
SUPPORT PROCESSES
Legal support X X X X X X X X
General support X
Accounting X X X X X X X X X X X X X X X X
Etc.
MANAGEMENT PROCESSES
Human resources management X X X X X X X X X X X X X X X X
Risk management X X X X X X X X X X X X X X X X
Quality management X X X X X X X X X X X X X X X X
Etc.
REALIZATION PROCESSES
Coal production X X
Etc.

Figure 1 Model Matrix organizational structure (shortened example)

2.4. Planning an organizational structure

It is a fact that a strategic document may project the general organizational structure that
supports strategic objectives, but the practice imposes tactical and operational planning of
organizational structure.

2.5. Tactical planning of organizational structure

By modeling the organization, we have recognized three resources, and those are: knowledge,
people, and time. People, the performers of a work, have limited time. Execution of a job task
requires competency of the performer (knowledge and skills) and time. Two kinds of time
appear. Time needed to complete some work (Planned time to execute job tasks expressed in
hours) and time during which the performer (employee) is available. We will call the time
needed to perform some work as ‘time normative for execution of job task’, and the time
during which an employee is available as ‘planned effective working hours of a performer’.

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We have envisaged in the model a relative value of a task that presents, in a sense of plan, a
base for determining a planned financial value of a job. Figure 2 presents a model of planning
job tasks through processes.

Relative value of job/hour

execution in hours
Planned time for job

Relative value of job

BAM
Planned value of job in
Process title and description of belonging tasks in that process

1 2 3 4=2*3 5=4*Z¹
SUPPORT PROCESSES
Legal support
Develops drafts of business agreements
Develops drafts of general documents of the company
Provides legal interpretation of laws and internal documents
etc.
General support
Develops plan of activities of general support
etc.
A-Sum of planned hours for execution of all planned tasks: Σ3
B-Relative value of all planned tasks: Σ4
C-Value of planned tasks in BAM: Σ5
(Z¹-Presents value of an hour in BAM for the relative coefficient 1)

Figure 2 Annual plan of job tasks presented through processes

Annual, i.e. tactical plan of job tasks by processes provide us an answer to the question – How
many effective hours is needed annually to perform all planned tasks? The answer is the sum
of all hours for all planned tasks. The question – How much is that all going to cost us? The
answer is the sum of all multiplications of relative values of job tasks and time duration of job
tasks multiplied by the worth of the relative coefficient 1 (one).
We have received answer to the question of how long every job tasks individually lasts and
costs on annual base. We can calculate how many employees we have to engage to perform
all the jobs tasks based on the total number of hours for all job tasks divided by the effective
hours of one employee on annual base. Such calculation is used as a landmark, not as the rule,
to estimate the number of employees. Question arises – How to plan employees? The answer
is a logical distribution and grouping of job tasks through OU. Afterwards, the managers of
OU redistribute the tasks to WP and they do it in several iterations until an optimal solution
for the organization is reached. In the end we reach the result that places undistributed tasks in
to ‘OUTSOURCE’ OU where they are organized in processes. Job tasks in ‘OUTSOURCE’
OU, beside the title of the job task, contain also the estimated value and planned duration,
which present a subject to contract with outsource contractors.

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2.6. Operational planning of organizational structure

Operational planning of organizational structure belongs to direct managers and it is carried

out daily, weekly, decadic, and monthly. Such planning may be called implementation
oforganization or realization of tactical plan.

2.7. Method of implementation of organization

We start from an assumption that the strategic goals (Financial perspective, Client
perspective, and Process perspective) [8] are assigned to the general manager of a company
and that these goals are a source for tactical planning (which implies planning of organization
and systematization of work posts) and the general manager is in charge to redistribute
tactical goals to lower management level (Figure 3). Real business life asks for being
operative, meaning that the tactical goals flow into operational tasks that have their time goals
and norms. Therefore, operational managers with their direct executors get into reaction with
the cruel market reality, where they are themselves present as the work force. Efficient
business operations require, besides others, efficient management of the work force as the
most complex resource. The goal of this work is not to treat the complete human resource
management, but to present models for designing a tool that supports a dynamic model of
efficient recognition and engagement of the best subjects for performing the required job
tasks.

STRATEGIC PLAN (Holder Director )

Goal 1 Financial perspective
Goal 2 Client perspective
Goal 3 Process perspective
TACTICAL PLAN (annual plan)
Holders Director and excutive directors
Goal 1.1
Goal 1.2
Goal 2.1
Goal... Other goals
OPERATING MONTHLY PLAN
Holders Managers of Sectors
Goal 1.1.1
Goal
Goal...1.1.2
Other goals
and/or tasks
OPERATING WEEKLY PLAN
Holders Chiefs
Distribution of tasks per employee with the
Goal and/or Norm and/or Performance
Employee 1
Employee 2
Employee...

Figure 3 Map of distribution of goals and job tasks

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2.8. Operational implementation of organization and measuring the key indicators

Market demands are becoming more stringent and if a company wants to survive, it has to
meet those demands. Adjustment means flexibility of an organization and flexibility of a work
power. There is no long-term organizational structure any more. Now organization strives
more and more to the project structure. This means that OU is formed when needed and not
forever. It has become a demand, almost on a daily basis, to adjust organizational structure
depthwise and widthwise. Better to say, conditions must be met in order to form and/or close
an OU when needed, i.e. to decrease a number of employees in accordance with the scope of
assigned job tasks. Therefore, the demand is to have a changeable number of engaged
employees and therefore the number of work posts too. Employment Rule Book and
Organization Rule Book are supported by ‘Deming’ application that enables negotiation of
price of work with an employee and the scope of job tasks that an employee can perform
competently. Assignment of job tasks to employee may be done on daily basis by issuing a
writtenIndividual Work Order on assignment of job tasks. Decision contains job tasks
arranged by processes that the employee should perform, as well as their relatedness to OU,
also goals and norms, supervision of a manager and so on. The collection of all Individual
Work Order on assignment of job tasks on a specific day represents the actual Organization
and Systematization of WP. Besides, an employee receives a work log that is adjusted to the
Individual Work Order and at the same time it is a tool to measure employee’s performances
and a tally sheet for calculation of salary.

3. CONCLUSION

Process and functional approach to managing an organization of a client oriented company

demands for tactical and operational redistribution of strategic goals by processes and lower
organizational levels. Actualization of business objectives require engagement and use of
resources in an effective and efficient way by managing performances of organization through
managing performances of OU and employees.
‘Deming’ application, with its accompanying deeds and documents, offers a ‘clean’ situation
and modern tools to measure the Key Performance Indicators (KPI) and establishes fair and
correct relations between employees and employer. Transfer of employees from one OU to
another is simple. Employee may work in several OU at the same time. He/she always knows
how much he/she has earned based on effective work, also how high was his/her performance
rated, and what monetary award should he/she expect for the work. Managers of OU are given
a tool for the effective management of pertaining processes and employees by dynamic
monitoring of KPI, based on which they can operatively undertake certain corrective actions
in order to optimize business performances.
Information on tactical actualization of the plan by continuously monitoring the KPI provides
an opportunity for the company to ‘shift’ and adjust organization on daily basis, i.e. to
efficiently and quickly perform organization’s restructuring in accordance with market
conditions, business standards, and the law.

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REFERENCES

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