MG4031 Org Structure and Design PDF

MG4031 Management Principles Organisational Structure and Design Reading: Chapter 6, Modern Management, pages 171- 193  Learning Objectives To understand the definition and composition of an organisations structure and its role To distinguish bet...

MG4031 Management Principles Organisational Structure and Design Reading: Chapter 6, Modern Management, pages 171- 193  Learning Objectives To understand the definition and composition of an organisations structure and its role To distinguish between Structural Configuration and Structural Operation To outline different types of Departmentalisation To explain Mintzberg’s range of structures To understand how organisational structure has evolved  Definition Important function of management “The process of dividing the tasks between individuals, groups or units and coordinating their activities to achieve organisational goals” It establishes the task, reporting & authority relationships within an organisation - the pattern of division and co-ordination Components of Organisational Structure Having an effective form of organisational structure has become an important source of competitive advantage where its fits with and supports the strategy & the culture Strategy Structure Culture Fit Divided into two main areas Structural Configuration (Org Chart): refers to the size and shape of the structure as shown in an organisational chart Structural Operation (Org Processes) refers to the processes & operation of an organisations structure  Configurational and Operational Components of Organisational Structure Structural Configuration Structural Operation Division of Labour Formalization Spans of Control Decision Making Hierarchical Levels Responsibility Departmentalisation Authority  Structural Configuration: Division of Labour The division of labour with an organisation is the extent to which the work of the organisation is broken down into different tasks Wide division of labour v’s narrow division of labour Many historical approaches on the best way from Task Specialisation to Job Enlargement to Job Enrichment to Socio-technical Systems Structural Configuration: Span of Control Spans of control are the number of employees directly reporting to a supervisor Narrow Wide  Structural Configuration: Hierarchical Levels This refers to the number of levels and the extent of hierarchy - outlines the reporting relationships within the organisation from top to bottom Flat Structures V Tall Structures  Structural Configuration: Departmentalisation Used as a method of co-ordination - although now departments have been replaced by business units or even separate divisions Four main forms of departmentalisation: Functional Departmentalisation Product Departmentalisation Geographical Departmentalisation Mixed Departmentalisation  Functional Departmentalisation Advantages People can concentrate their efforts Resources are used efficiently Measurement of performance and output can be easier Specialised training for individuals within the function is facilitated Each functional area has status Disadvantages Large departments can be difficult to co-ordinate A focus on departmental goals only can emerge Difficult to develop managers with expertise in many areas Possibility of internal competition between functions Can lower customer satisfaction  Product Departmentalisation Advantages Business units can evaluated as profit centres Additions to product line can easily be incorporated Allows faster co-ordination than with functional Develops managers with experience of various functions Employee commitment to a product line Disadvantages Co-ordination among specialised product areas can be a problem Duplication of functional services Less interaction between functional specialists Emphasis on product goals not organisational  Geographical Departmentalisation Advantages It encourages logistic efficiency It allows divisions to adapt to local markets Legal, cultural and political differences can be minimised It provides a good training ground for managers Disadvantages It needs a large number of general managers Top management loses a degree of control over operations A duplication of support services is inevitable Employees may focus on regional objectives at the expense of wider organisational goals  Mixed Departmentalisation Mixed Departmentalisation involves using a hybrid of Functional, Product and/or Geographical structural arrangements Typically occurring in large multinational organisations Provides for some of the key benefits of the individual structural types The downside relates to possible struggles because many of the units will have multiple managers responsible for the product, the function, the geography etc who may have cross-overs in their managerial roles and responsibilities  Configurational and Operational Components of Organisational Structure Structural Configuration Structural Operation Division of Labour Formalization Spans of Control Decision Making Hierarchical Levels Responsibility Departmentalisation Authority  Structural Operation- Formalization What is the network of rules like in the Organisation? Refers to the degree to which rules and procedures shape the jobs and tasks completed by employees The main purpose of formalisation is to predict and control how employees behave on the job Can be high (many rules) or low (few rules) High formalisation is designed to ensure standardisation & high quality Structural Operation- Decision Making How does decision-making work in the Organisation? Decision making can be either centralised or decentralised Centralised refers to a decision- making policy where authority resides at the top of an organisation Decentralised means that decisions are taken at all levels of the organisation  Structural Operation- Responsibility Where does responsibility lay? Viewed as an obligation to do something - achieving goals and managing employees Typically operates on the principle of Delegation – passing on responsibility  Structural Operation- Authority How does Authority lay? Authority is the power that has been legitimised within a certain social context Legitimate power- position in hierarchy Expert power- authority associated with knowledge  Approaches to Structure: Universal Historically universal approaches were applied to structure i.e. always one best way of structuring an organisation regardless of external factors Classical principles advocated by Fayol and Weber. These approaches focus entirely on the formal organisation and ignore the role of the informal organisation Factors such as the organisation’s external environment, size and technology were ignored  The Mintzberg Framework Simple Machine Professional Divisionalised Adhocracy Structure Bureaucracy Bureaucracy Structure STRUCTURAL TYPES Recent Trends in Organisational Structure Bureaucracy is suitable for stable and simple environments The trend has been away from bureaucracy to more flexible forms of structure 1. Flatter Hierarchies 2. Changes in Job Design 3. More responsibility & authority 4. Increased use of Teams  Recent Trends in Organisational Structure The emergence of New Organisational Forms The Matrix Organisation The Team based Organisation The Virtual Organisation Thank you