101 lect4 organising

TOPIC 6: ORGANISING

DR DOUG NISBET

PGDBA 101

Strategic Leadership and Management Skills

Slide 10.2

David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011

Chapter 10Organisation structure

• Structure and performance• Elements in structure: the design options• Dividing work into functions and divisions• Coordinating work: alternative ways• Mechanistic and organic structures• Learning organisations• Cases and examples

– Oticon, Multi-show, BAE, Roche, Pixar, Monsanto

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Structure and performance

Figure 10.1 Alternative structures and performance

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Why study structure?

• Evidence that a company’s structure affects whether it adds value to resources – For example, how to divide and coordinate tasks

• Current structure reflects assumptions • Knowledge enables us to question

– Assumptions in a structure, and its context– Alternatives available– Limitations of any structure

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Structure and performance?

• As a business grows, those running it divide the work and coordinate the parts – they create a structure within which people work

• When an organisation is not performing well, managers often change the structure

• Reflect the belief that structure affects performance– Clarifies expectations and enables monitoring– Avoids confusion and waste of poor structureWhat kind of structure works best?

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Designing a structure

• Structure is how work is divided, supervised and coordinated

• It defines the responsibilities of divisions, departments and people – What they are expected to do

• Summarised in an organisation chart: compare Multi-show Events and BAE factory

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Structure of a unit in a large business

Figure 10.2 The structure within a BAE aircraft factory (www.baesystems.com)

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Developing structure ina small business

Figure 10.3 The organisation structure at Multi-show Events

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Vertical structure – how centralised?

What decisions can people at different levels in

the vertical hierarchy take?• Centralisation (those at the centre make most

decisions) and its opposite, both have advantages and disadvantages (Table 10.2)

• A shifting balance, reflecting – Attempts at rational analysis– Managers’ career interests– Siemens (see p.362)

What degree of centralisation works best?

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Grouping work into functions and divisions

Figure 10.5 Five types of structure

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Horizontal structure – five ways

• Functional (see BAE Systems)– Common professional or other expertise (Figure 10.2)

• Divisional – Products, customers (Figure 10.7) or geography

• Matrix– In functional groups, work on divisional tasks

• Teams– Members work on distinct tasks and link with others

• Networks– Organisation as broker between independent units

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Contrasting structures in nursing

Figure 10.7 Task and named-nurse structures

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Coordinating work

If divide work, then need to coordinate it by:• Direct supervision• Hierarchy• Standard inputs or outputs• Rules and procedures• Information systems (see Siemens)• Direct personal contact

What method of coordination works best?

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Mechanistic and organic structures

Table 10.4 Characteristics of mechanistic and organic systemsSource: Based on Burns and Stalker (1961)

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Contrasting forms

• Burns and Stalker identified alternative forms• Each appropriate to certain conditions

– Mechanistic – stable – Organic – unstable

• Fit with conditions led to high performance• Later work (Lawrence and Lorsch 1967) focused

on differences between units within the same organisation

• Related differences to contingencies

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Contingencies – strategy

– For example, cost leadership or differentiation – what structure to encourage relevant behaviour?• Cost leadership requires efficiency – a functional

structure?• Differentiation needs innovation – matrix or team-

based?– Monsanto an example of a company whose

innovative business is supported by a highly organic structure

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Strategies and structures

Figure 10.8 Relationship between strategies and structural types

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Contingencies – technology

What structure best supports technologies used to transform inputs, in manufacturing or services? • For example, production line or custom-made?• For example, information systems enable different

ways of delivering services, and prompt a search for new structures to support relevant behaviour?• Chapter 18 (Managing Operations and Quality) shows other ways of designing transformation processes using different technologies

Slide 10.19


Contingencies – business environment

What structure best supports people as they cope with different environments?

• Burns and Stalker (1961) contrasted– Rayon plant (stable market, few changes) with – Small electronics companies (volatile, uncertain

market, many changes)• Lawrence and Lorsch (1967) showed that firms

face many environments with different needs– How to link differently structured departments?

Slide 10.20


Environment and structure

Figure 10.9 Relationship between environment and structure

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Contingencies – size and life cycle

What structure best supports an organisation as it grows (number of staff)?

• Birth – informal, little division of labour, organic• Youth – decisions shared more widely,

specialists employed• Mid-life – extensive division of responsibility, with

rules for coordination• Maturity – mechanistic, perhaps divisions,

selling some units that no longer fitProblem of managing the transitions

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Contingencies or management choice?

• Contingency– Effective performance depends on managers

adopting a structure suited to the key contingencies of the environment in which it is operating

• Management choice– Managers have greater degree of choice over the

structures they adopt• Standards of performance not always rigorous• Preferred choices may have limited effect on

performance• Political interests and ambitions shape choice

• Implications for role of managers?

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Learning organisations

Figure 10.10 Clusters of learning organisation featuresSource: Pedler et at. (1997)

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Integrating themes

Sustainable performance

Local autonomy may permit bad practice, or use local knowledge to design good practice

Governance and control

Financial crises routine lead to calls for tougher controls – but most failing companies have them

Internationalisation

Bartlett and Ghoshal (2002) show the dilemmas firms face in designing international structures

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Conclusion

• Ideas of – Vertical and horizontal structures– Coordination– Mechanistic and organic forms

• Provide ways to analyse current practice• Practice reflects managers’ assumptions

(and personal and career interests)• Are they right for the context, what alternatives

may work better and what are their limitations?

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The HRM territory

Figure 11.1 Map of the HRM territorySource: Beer et al. (1984). Reproduced with permission from Professor Michael Beer

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Guest (1987) HRM policies and outcomes

Table 11.1 Policies for supporting HRM and organisational outcomesSource: Guest (1987), p. 503

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Four propositions in HRM theory

Guest (1987) identified four propositions of a theory of HRM• Integration – Linking HRM policies and strategy will enhance performance• Commitment – will lead employees to be more satisfied, perform better, stay longer and be willing to change• Flexibility – in both structures and employees will make it easier to change with conditions • Quality – high quality staff, suitably managed, will deliver high quality results

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HRM philosophy

External fit• Link between wider

strategy and HRM strategy

• For example, different approaches for low cost and differentiation strategies

Internal fit• Consistency of HRM

policies• For example,

teamworking is supported by reward systems

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Fit between HRM, structure and context

Figure 11.2 Fit between HRM, strategy, structure and environment

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Chapter 12Information systems and e-business• Why study IS and e-business? • Convergence transforms how people add value• Value depends on technology and organisation• Operating and management systems• Applications – enterprise resource planning,

customer relations, knowledge and e-business• IS and the tasks of managing• Cases and examples:

– Google, SelectMinds, Renault, Iris, Nestlé

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Why study IS and e-business?

• Managing depends on information (Fig. 12.1)• Steady increase in power of computing systems• IS moved from background to foreground tasks• Convergence of data, voice and visual systems

is changing business and public services• Effective use of IS to support strategy depends

on managing organisational issues.

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Management depends on information

Figure 12.1 The role of Information systems in Organisations Source: Boddy et al. (2005)

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Managing new opportunities to add value

Technological developments enable managers to:

Use IS in established organisations to add value to data – Figure 12.3

AND

Producers and consumers to co-create value – Figure 12.2

Value depends on managing technology AND organisation – Figure 12.4

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Stages in using the Internet

Figure 12.3 Stages in using the Internet

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Co-creation (or Wikinomics)

Figure 12.2 Traditional delivery and customer participation

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Computer-based IS

Figure 12.4 The elements of a computer-based ISSource: Boddy et al. (2009a)

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Data, information and knowledge

• Data– Recorded descriptions of things and events

• Information– Processed data that means something to the

person receiving it• Knowledge

– A property of people which guides their action – embodies experience and learning

• Relate to inputs, transformation and outputs– Enables people to add value to resources

Slide 10.39


Operating and management systems

Figure 12.5 Types of information system

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E-commerce and e-business

Internet allows companies to coordinate

processes with others, regardless of distance• E-commerce

– Selling goods or services over the Internet (Google)• E-business

– Integration, through the Internet, of all processes of an organisation, from its suppliers throughto its customers (Nestlé shows the challenges)

• Common applications: CRM, ERP and KM

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How the Internet changes the links

Figure 12.6 Reinventing the supply chain

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Customer relationshipmanagement (CRM)

Figure 12.7 Communications methods and message

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Management issuesof CRM systems

Potential benefits:• Gather customer data swiftly• Identify most and least valuable customers• Increase loyalty by providing customised offers• Reduce costs of maintaining and securing

customers• See Tesco (Part 6 case) for their Clubcard scheme

Possible disadvantages:• Hard to implement – require changes to many

other systems

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Enterprise resourceplanning (ERP) systems

Figure 12.8 Anatomy of an enterprise system

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Management issuesof ERP systems

• Potential benefits– Integrate customer and financial information– Standardise manufacturing processes and reduce

inventory – Improve information for management decisions

across sites– Link suppliers and customers online

• Difficulties include– Generic systems may diminish uniqueness– Promote centralisation – is that suitable?– Complex to implement – many fail

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Knowledge management systems

• Potential benefits– Improve way an organisation creates, captures and

uses knowledge– Relates to inputs, transformation and outputs– Examples of BP and Buckman Labs

• Difficulties include– Most valuable knowledge is tacit (shared

understanding, often unwritten): IS best suitedto explicit, codified knowledge

– Do rewards structures encourage people to share knowledge?

Slide 10.47


IS, strategy and organisation

Figure 12.9 How information systems can change competitive forces: Porter’s modelSource: Adapted and reprinted by permission of Harvard Business Review. Exhibit adapted from Strategy and the Internet, Harvard Business Review, vol. 79, no. 3, pp. 63–78 by M. E. Porter, Copyright © 2001 by Harvard Business School Publishing Corporation; all rights reserved

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Integrating themes


Wide use of IS is part of the problem (cause waste), and part of the solution (reduce waste)


Weill and Ross (2005) show the value of developing effective IS governance systems


IS enables the growth of global trade – but managers also need to take account of national cultures when introducing cross-border systems

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Conclusion

• Developing technologies have moved IS from the background to the foreground of managing

• Focusing on the technical aspects of computer-based systems will usually add less value than attending to the strategic, human and organisational aspects

• Models presented enable you to question whether the assumptions behind a proposal are right for the context, to explore alternatives and to recognise limitations

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Chapter 13Managing change and innovation• Episodes or constant feature of managing?• Initiating change – interaction with context• Four models of change• Driving and restraining forces• Forms and sources of resistance• Innovation• Cases and examples

– Vodafone/Ericsson, GKN, Dupont, Philip Morris

Slide 10.51


An overview of the themes

Figure 13.1 A model of the change process

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Why study change?

• Managers frequently change aspects of their organisation to improve performance

• Alternative ways of managing change reflect assumptions about its nature

• Models enable you to question– Whether the approach being used is suitable

for the context– What alternatives may work better in that

situation?

Slide 10.53


Change and managing

• Many see disruption at centre of role– Focus on inputs, transformation and outputs

• External environment main driver – Customers, shareholders, competition: see

Siemens• Vodafone case typical

– Significant, will affect many people, unfamiliar territory

• Models and perspectives to gain insight into the activity and to think critically about proposals

Slide 10.54


Interaction of change and context

• External changes threaten a performance gap– Results not meeting expectations

• Performance imperatives– Flexibility, innovation AND efficient operations

• Depend on making internal changes– When people perceive elements of the internal

context obstruct external expectations – Figure 13.2 and examples in Table 13.1

Slide 10.55


The internal context

Figure 13.2 Elements of the internal context of management

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• People interpret contexts and shape project – Influenced by local/personal and corporate interests

• People initiate project to change context– Changing one or more elements in Figure 13.2

• Those changes become the new context– Elements in Figure 13.2 affect capacity for change

• Culture, technology etc.– ‘receptive and non-r. contexts’ (Pettigrew, 1992)

• Continuous interpretation and interactionbetween context and successive change projects

Interaction of change and context (Continued)

Slide 10.57


History and levels

• Present context a result of previous decisions– Past, and potential futures, affect how people

interpret proposals• Context has several levels

– For example, corporate, divisional, work unit– Change at one level may have unintended

effects at other levels (negative or positive)

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Models of change – life cycle

• Change goes through a series of steps• Success depends on managing these efficiently

– Objectives, responsibilities, deadlines, budgets, monitor

– Focus on planning and control • Many established tools and techniques –

Figure 13.3 and Figure13.4• A rational process

– Suited to which types of project or conditions?

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Planning tools

Figure 13.3 A simple bar chart

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The life cycle illustrated

Figure 13.4 A project life cycleSource: Lock (2007) p. 8

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Models of change – emergent

• Change takes place in an uncertain context,and unrealistic to expect outcomes to be closeto plan

• Success depends on– Learning during the project– Adapting to changing conditions– Managing interest groups

• Plan, but be ready to change• See emergent perspective on strategy

(Chapter 8, including IKEA example (p.230))

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Models of change – participative

• Change relies on those affected being willingto cooperate with the change

• Success depends on– Developing ownership and commitment– Consulting widely for ideas– Seeking consensus

• A democratic process– Suited to which conditions?

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Models of change – political

• Change often threatens established interests, who will oppose it

• Success depends on – Building power sources– Creating alliances and coalitions– Manipulating information to support position

• A political process– Suited to which conditions?

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Kurt Lewin – drivingand restraining forces

Figure 13.5 Driving and restraining forces

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Resistance to change

• How people react to change affects, and is affected by, those promoting it– From strong support to strong opposition

• To analyse resistance,– Problems with content of change – see Table 13.3 – Problems with process – see ‘models of change’

Slide 10.66


Innovation

• Innovation is the process through which new ideas, objects, behaviours and practices are created developed and implemented

• Incremental innovations are small changes in a current product or process which brings a minor improvement

• Radical innovations are large game changing developments that alter the competitive landscape

Slide 10.67


Figure 13.6 Systems view of innovation

Systems view of innovation

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Sources of innovation

Figure 13.7 Sources of innovation

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The Process of innovation

Figure 13.8 A model of the innovation processSource: Based on Tidd and Bessant (2009)

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The 4 Ps of innovation

• Product innovations are changes or enhancements to the features of the things that the organisations sells

• Process innovations are changes in the processes that create the product that is sold or deliver the service that the customer buys

• Position innovations are changes in the way that the product of service offering is targeted

• Paradigm innovations are changes in how companies frame what they do

Slide 10.71


Organisational support factors

• Strategy – innovation is explicitly called for in the corporate strategy

• Structure – roles and jobs are defined to aid in innovative behaviour

• Style – management empowers the workforce to behave innovatively

• Support – IT systems are available to support innovative behaviour

Slide 10.72


Integrating themes


The search for this offers opportunities to innovators who can find ways to reduce waste


Financial crises show the dangers of innovation, when not balanced by governance systems


Companies want to encourage local innovation, but need to ensure this does not lead to wasteful duplication within the business

Slide 10.73


Conclusion

• External and internal forces driving change• Managing it depends on having a model of the

process – such as the interaction model• Four perspectives offer complementary models

– which is best for the situation• Innovation can be used as a tool to enhance

what the company offers to the market

Learning Objectives • To understand the input-output model and the internal

and external environments of a business organisation;

• To be aware of the different types and legal forms of business organisation and their benefits and drawbacks

• To understand the various roles within management

• To understand the management tasks of planning, organising, leading and controlling and how these can be achieved through the various dimensions of internal and external context.

A Model of Business Management Environment

The Input-output Model

Input TransformationProcess Output

Add Value

Create Waste

Classifying Businesses• Size

– Small, medium, large• Type of Industry

– Primary, secondary, tertiary• Sector

– Private, public• Legal Status

– Sole trader, partnership, limited company

For information and statistics about Ugandan Business follow this link to the Ugandan Bureau of Statistics website( if you based in another country search for an equivalent site):

http://www.ubos.org

http://www.ubos.org/

Legal Forms of Business – Private Sector

• Sole Trader• Partnership• Limited Companies

– Private (Ltd)– Public (Plc)

• Co-operative Societies- Uganda Co-operative Alliance- http://www.uca.co.ug

http://www.uca.co.ug/

Franchising, Licensing and Joint Ventures

• Franchising:– is an arrangement where one party (the franchiser) sells the right to another party (the franchisee)

to market its product or service;– Franchise Expo: http://www.franchiseexpo.co.uk/– The Franchise Business: http://www.franchisebusiness.co.uk/– Franchise Direct (Ugandan Franchises):

http://www.franchisedirect.com/internationalfranchises/uganda/217/– The UK Franchise Directory:

http://www.theukfranchisedirectory.net/match/franchises.php?gclid=CKKD5-2WuqYCFYUe4Qoden-FHA

• Licensing:– is a firm in one country (the licensor) that authorises a firm in another country (the licensee) to use

its intellectual property (e.g. patents, copyrights, trade names, know-how) usually in return for royalty payments.

• Joint Venture:– is a jointly owned and independently incorporated business venture involving more than one

organisation;– ranges from two companies joining together in the same domestic market, to joint private/public

sector ventures between participants from different countries.

http://www.franchiseexpo.co.uk/

http://www.franchisebusiness.co.uk/

http://www.franchisedirect.com/internationalfranchises/uganda/217/



Public Sector OrganisationsPublic sector organisations:

• Central government departments (e.g. departments in charge of pension, education, healthcare, defence, transport, etc.);

• Local authorities;

• Non-departmental public bodies or quangos (e.g. Uganda Wildlife Authority);

• Central government trading organisations (e.g. Posta Uganda) http://www.ugapost.co.ug/

• Public corporations (e.g. Uganda Printing and Publishing Corporation http://www.uppc.co.ug/

• Public Service Commission (Uganda): http://psc.go.ug/

• Ministry of Public Service (Uganda): http://www.publicservice.go.ug/

http://www.ugapost.co.ug/

http://www.uppc.co.ug/

http://psc.go.ug/

http://www.publicservice.go.ug/

Public Corporations• Public corporations:

– Are statutory bodies, incorporated (predominantly) by a special Act of Parliament;

– They have a separate legal identity from the individuals who own them and run them.

– They are governed by the government department which oversees its operations.

• Nationalised Industry:– Private companies taken into state ownership

• Privatised state industries:– Are those industries that were turned into public limited companies.

Examples in Uganda included Ugandan Airlines privatisation which was not a success and National Insurance Corporation (NIC)

• Golden share:– Government influence in public corporations,

Legal Structures - implications

• Implications in private sector:– The degree of personal control over operational and strategic business

decisions;– The degree of personal liabilities;– The degree of power and/or autonomy in decision making;– The cost of establishing the business;– The legal requirements concerning the provision of public information;– The taxation position;– Commercial needs, including access to capital;– Business continuity.

Functional Specialisation in Management

• Company Managers– Chief Executive Officers (CEO); Managing Director;

Proprietor• General Managers

– Subsidiary; Division• Functional Managers

– Line Managers (branch; team; department)– Staff Managers (HR; Accounts; Safety: Purchasing )

• Project Managers– Cross-functional teams

Management Hierarchies

• Operators• Supervisors• First Line Managers• Middle Managers• Senior Managers• Directors

Influencing - Mintzberg

Decisional

Informational

Interpersonal

EntrepreneurDisturbance handlerResource allocator

Negotiator

FigureheadLeaderLiaison

MonitorDisseminatorSpokesperson

Managing Tasks

Internal Context (or Environment)

Critical Thinking

Critical thinking……‘involves our recognising the assumptions underlying

our beliefs and behaviours. It means we can give justifications for our ideas and actions. Most, important, perhaps it means we try to judge the rationality of these justification…..by comparing them to a range of varying interpretations and perspectives’

SOURCE: Brookfield (1987) in Boddy (2011), p26.

Process of Critical Thinking

• ANALYSIS• Identifying and challenging assumptions• Recognising the importance of context• Imagining and exploring alternatives• Seeing limitations

• SYNTHESIS• Making conclusions• Decision-making

BODDY, D (2011) Management – an introduction (5th Edition) Harlow:Prentice Hall Chapter 1

WORTHINGTON, I and BRITTON, B (2009) The Business Environment (6th Edition) Harlow:Prentice Hall Chapters 10, 11, 12

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