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Module 9 pt.2 - Organisational Structure (Dimensions of organisation…
Module 9 pt.2 - Organisational Structure
Organisational Design Vs Structure
Organisational design
- the process of choosing and implementing a structural configuration of an organisation.
Technology
the combination of resources, knowledge and techniques that creates a product or service output for an organisation.
organisation internal structures are arranged to meet the needs of dominant ‘technologies’ or workflows (technological imperative)
Scale
the scale (size) of the organisation determines the complexity of the organisational design.
Larger organisations often have more people, products, production processes, and geographic locations and so on
Environment
include cultural, economic, legal-political conditions, owners, suppliers, distributors, government, and competitors.
Effective organisational design considers powerful external forces as well as desires of employees and managers.
Strategy
An organisation's strategy drives its goals and vision, and an organisational design is established to achieve its vision.
Organisational structure
- the configuration of positions, job duties and lines of authority among the components of an organisation.
Organisational Goals
Two types of goals
How it intends to serve society
How to survive
(1)Output goals
define the organisation’s type of business, and used in the mission statement, indicating the purpose of the organisation.
(2)Systems goals
provide a ‘road map’ to assist in linking together various units of an organisation to assure its survival.
Control
The set of mechanisms used to keep actions and outputs within required limits.
Once goals are defined, controls are put in place to ensure that those goals are met.
Setting standards, measuring results against standards, and taking corrective action.
Co-ordination
linking the actions of subunits into a consistent pattern.
Coordination can be personal or impersonal.
Personal coordination produces synergy by promoting dialogue, discussion, innovation, creativity and learning, between individuals and units.
Impersonal methods of coordination relate to the use of written policies and procedures, such as schedules, budgets and plans that are designed to mesh the operations of several units into a whole.
Dimensions of organisation design
Vertical specialisation
The work positions are arranged in a hierarchy of authority, and a chain of command,
in order of increasing authority
.
Top managers deal with strategy and long term vision, while middle managers guide the daily operations of the organisation, help formulate policy, and translate top-management decisions into action.
Centralisation
The authority to make decisions is restricted to higher levels of management.
Decentralisation
The authority to make decisions is given to lower levels in an organisation’s hierarchy.
Horizontal specialisation
the division of labour by forming work units – often referred to as departmentalisation.
There are three forms of horizontal specialisation: by function, division and matrix, and also ‘mixed’ or ‘hybrid’ forms that are emerging.
By function
grouping individuals by skill, knowledge and action. This is the most common arrangement.
functional departments tend to develop narrow interests, limited perspectives, competitive behaviours, unique languages and cultures, and develop a habit of passing blame to other departments.
By Division
groups individuals and resources by products, services and/or clients/customers.
This pattern is used to meet diverse external threats and opportunities.
Many larger, geographically dispersed organisations that sell to national and international markets use departmentalisation by geography.
By Matrix
A combination of functional and divisional patterns (simultaneously) - an individual is assigned to more than one type of unit.
E.g. RACI matrix for project work. Divisions have functional departments
Emerging forms of organisation designs
simple design
- one or two ways of specialising individuals and units e.g. small family business.
The bureaucracy
- ideal form of organisation which includes division of labour, hierarchical control, promotion by merit, career opportunities, and administration by rule.
Divisionalised organisation
- a separate structure for each business or division. Division heads run their divisions like separate businesses but enjoy common support from parent company.
The conglomerate
- organisations that own several unrelated businesses. If there is synergy, it is divsionalised, if there's no synergy, it is conglomerate.
Core-ring
- an inner core, relatively permanent, workforce with higher job security, higher salaries and better career paths.
A flexible outer ring of workers employed on a part-time or casual basis - have lower job security, lower pay and lack of career paths.
The adhocracy
- a structural form that emphasises shared, decentralised decision making, extreme horizontal specialisation, few levels of management and few formal controls.
Other organisation designs include
strategic alliances
, networked organisations, virtual organisations and
franchises.