MG4031 Week 07 Lecture 02 PDF

MG4031 Wk.07 Lec.02 Structural Operation: The processes and systems associated with organisational structure. - Formalisation: The degree to which rules and procedures shape the jobs of employees. High formalisation involves lots of rules and procedures, it leads to high quality...

MG4031 Wk.07 Lec.02 Structural Operation: The processes and systems associated with organisational structure. - Formalisation: The degree to which rules and procedures shape the jobs of employees. High formalisation involves lots of rules and procedures, it leads to high quality and safety, but reduces autonomy, freedom and initiative. Its purpose is to anticipate and control employee’s performance. - Decision Making: This can be centralised (where authority resides at the top) or decentralised (where decisions are taken at all levels). Centralisation ensures uniformity, while decentralisation ensures that problems can be solved on the spot. Decentralisation also allows employees to develop more, it increases motivation and improves delegation of work. - Responsibility: An obligation to do something under the expectation that some act/output will be achieved. Delegation is passing on responsibility. - Authority: The right to direct performance on command. Power types were discussed in week 6. Universal Approaches to Organisational Design: Administrative Management (Fayol) Bureaucracy (Weber) *See MG4031 Week 02 Lecture 01 for detailed information of the above. Mintzberg Framework: Building on contingency theory (Wk.02 Lec.01), Mintzberg identified five types if structure: 1. Simple Structure: Found in new and small enterprises. Co-ordination is by direct supervision, the structure is organic, with little specialisation/formalisation. The CEO holds most of the power and decision-making authority. It can react quickly to changing events. E.g. a local garage/shop. 2. Machine Bureaucracy: Found in large and experienced organisations in a stable environment. Standardisation of work processes is the main form of co-ordination. There is a lot of emphasis put on the division of labour, formalisation and centralised decision making. It doesn’t have to change quickly because of the stable and simple environment. E.g. a mass production organisation. 3. Professional Bureaucracy: Professional organisations in complex yet stable environments. Co-ordination is by the standardisation of skills. Division of labour is by expertise and there is little formalisation. Decision making is decentralised. E.g. a university.  4. Divisionalised Structure: Found in old, large organisations in a simple and stable environment with many distinct markets. Decision making is split between HQs and standardisation of outputs is the main form of co-ordination. It tends to form a machine bureaucracy in each of the divisions. E.g. General Motors (GM). 5. Adhocracy: Found in young organisations in a complex, technical and changing environments. Co-ordination is by mutual adjustment (informal communication). Decision making is decentralised and there is little formalisation. Specialist teams are used to achieve goals. It is designed to encourage innovation. E.g. J&J. Modern Business Design: The bureaucratic strategy is becoming less and less appropriate for enterprises as the business environment becomes more dynamic and complex, so four main structural trends are beginning to emerge: Flatter Hierarchies: This reduces costs and improves information flow. It also allows innovative ideas to flourish. Changes in Job Design: The division of labour is being extended. Employees today need to be flexible, so have widened job categories and are multiskilled. Increased responsibility and authority: Decision making responsibility is being pushed downwards. Team Mechanisms: Self-managing teams can often achieve more than individuals. This has led to a new form of organisational structure. The Matrix Structure: A combination of the functional and product/service structure, first implemented by TRW Inc.. Employees are members of both a functional group and a product group. They essentially have two supervisors. It is common in organisations with diverse activities, or those trying to manage projects. Advantages: Disadvantages: → Innovation + Synergies → Two supervisors, interpersonal and → A project manager manages every command conflicts aspect of a project → Power struggle between the two → The use of specialists is maximised supervisors, slowing down decision → Specialised functional assistance is making available for all projects → Employees can become narrow → It provides well trained and flexible sighted and lose track of the wider managers organisational objectives → Accountability and authority are more difficult to track It is most appropriate for short run, complex products, for complicated products and those needing hasty completion, when many sophisticated skills are required and when the marketplace is rapidly evolving. There must be a strong purpose for a matrix structure, as well as strong alignment between functional departments and the matrix, and it requires careful management. References: Notes based on MG4031 Lecture Slides and Modern Management: Theory and Practice for Students in Ireland (5th Ed.) - Tiernan S. and Morley, M.J. Chapter 6.