Organisational structures
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Transcript Organisational structures
Organisations - structure,
functions and culture
(special thanks to Geoff Leese)
Objectives
Be able to describe the ways in which
organisations may be structured
Know the characteristics of tall and flat
organisational structures
Understand centralisation/decentralisation
Have an overview of organisational functional
areas
Know the importance of information systems in
organisations
First - a definition!
“the structure of an organisation can be
defined simply as the sum total of the
ways in which it divides its labour into
distinct tasks and then achieves
coordination between them”
(Mintzberg, 1979)
Purpose of Organisational Structure
To allocate tasks and responsibilities
(DISINTEGRATION)
To identify and clarify roles and levels of
responsibility
To coordinate activities and roles once
allocated
(INTEGRATION)
To facilitate and regulate information flows
and decision making processes
To serve, in some measure, as a means of
resolving differences
Issues!
Task differentiation - how much?
Tight or loose control?
Mechanistic Vs organic?
Central or devolved authority?
Prescriptive job definition?
Span of control?
Communication flows/decision making?
External (environmental) factors?
Basic factors involved
Purpose and goals
Tasks
People
Technology
Culture
External environment
Functional Specialisation
Advantages
Professional expertise
enhanced
Usually effective in
practice
Traditional form of
departmentalisation
Readily accepted by
employees
Disadvantages
Sub-optimality
Problems adapting to
change (geographical,
product diversification)
Narrow functional
experience less suitable
as training for general
managers
Geographical Specialisation
Advantages
Faster decisionmaking
Uses local knowledge
Speedier reaction time
Some operating costs
lower (storage,
transport)
All round experience
good training for
managers
Disadvantages
Loss of control by “head
office”
Problems co-ordinating
local activities
Duplication of effort
Product Specialisation
Advantages
Develops expertise in
products/services
Responsibilities clearly
identified
Diversification and
technological change
easier to handle
Disadvantages
Sub optimality again!
Possible co-ordination
problems
Loss of control by
senior management
Matrix Structure (1)
Chief Exec
Production
Finance
Marketing
Project A
Manager
Project B
Manager
Project C
Manager
Vertical flows - functional authority
Research
Matrix Structure (2)
Can help motivation
Helps direct effort
Can result in “division of
authority/responsibility”
conflicts
Resource allocation
problems
Resentment of “functional
heads”
One man, One boss?!
Tries to combine stability & efficiency of “functional” division with
flexibility and directness of “project based” division
Factors influencing span of control
Narrow span
Wider Span
Complex work
Simple work
Uncertain environment
Stable environment
Less able subordinates
Able subordinates
More risk/danger
Less risk/danger
Less able manager
Able manager
“Tall” Vs “Flat” structures
Size of organisation
Complexity & nature of operations
Production methods
Technology
Management style
Amount of delegation
Spans of control
Ability of managers & personnel
“Tall” Vs “Flat” structures
Larger size
Many levels
Narrow span of
control
Long chain of
command
More formality,
specialisation &
standardisation
Smaller size
(usually)
Fewer levels
Broad span of
control
Short chain of
command
Decentralisation advantages
Improvement of local decision making
Improvement of strategic decision making
Increased flexibility
Reduced communication problems
Increase motivation of local management
Better training for junior management
Decentralisation disadvantages
Possible sub-optimal decision making
More co-ordination problems
Control and monitoring problems
Needs intelligent & well motivated junior
managers
Don’t decentralise!
Decisions about technologies, markets &
products
Decisions about diversification and
contraction
Decisions about corporate finance
Decisions about corporate personnel
policy and key appointments
(Drucker)
The “Flexible Firm”
Core versus peripheral activities
Functional flexibility for core activities
Polyvalence/multiskilling
One man, one job?
Numerical flexibility for peripheral activities
Outsourcing
“Hire & fire”
Business Functions
Marketing
Production
Finance
Personnel
Administration
Marketing
What does the customer need?
Product design
Production levels
Storage, distribution and delivery
Market Research
Advertising
Selling
Production
Making or assembling product from raw
materials or components
Types of production
One-off
Small
batch
Large batch
Continuous process
Finance (1)
Financial accounting
“keeping
the books”
provision of info for taxation authorities
production of statutory and traditionally
required documents
Finance (2)
Management accounting
Provision
of information for decisionmaking
Budgets
statements
of resources available for a
given period
expenditure monitoring and control
Financing
Amounts
and methods of raising funds
Personnel(1)
Recruitment
Deployment
Training
Selection for promotion/advancement
Personnel(2)
Wages/salaries & benefits
grievances and discipline
Termination of employment
retirement
redundancy
dismissal
death!
Administration
Creating and operating rules,
procedures and regulations
Implementing decisions and directives
Creating and maintaining channels and
media for communication
Implementing changes in organisational
policy
Effects on Info. Systems
IS must be tailored to suit needs
Consider information flow requirements
Consider control issues
Consider culture
Consider degree of centralisation
Consider empowerment/delegation issues
Consider available technology!
Further Reading
Bott et al sections 2.3, 3, 4, 8
Butel L et al (2002), Business
Functions, an Active Learning
Approach, Blackwell, Oxford
Sections
1.1 and 4
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