Organisations - structure, functions and culture

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

Professional expertise enhanced

Usually effective in practice

Traditional form of departmentalisation

Readily accepted by employees

Sub-optimality Problems adapting

to change (geographical, product diversification)

Narrow functional experience less suitable as training for general managers

Advantages Disadvantages

Geographical Specialisation

Faster decisionmaking

Uses local knowledge Speedier reaction

time Some operating

costs lower (storage, transport)

All round experience good training for managers

Loss of control by “head office”

Problems co-ordinating local activities

Duplication of effort

Advantages Disadvantages

Product Specialisation

Develops expertise in products/services

Responsibilities clearly identified

Diversification and technological change easier to handle

Sub optimality again!

Possible co-ordination problems

Loss of control by senior management

Advantages Disadvantages

Project CManager

Matrix Structure (1)Chief Exec

Production Finance ResearchMarketing

Project AManagerProject BManager

Vertical flows - functional authority

Hori

zon

tal flow

s -

Pro

ject

auth

ori

ty

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 withflexibility 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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