organisation structure the established pattern of relationships among the component parts of the...
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Organisation Structure
The established pattern of relationships among the component parts of the organisation
The features which serve to control or distinguish its parts
Formal Structure Often Described In Terms Of:
The pattern of formal relationships and duties - charts, job descriptions, etc.The way in which the various activities or tasks are assigned to differentiate departments and/or people - differentiationThe way in which separate activities or tasks are co-ordinated -integrationThe power, status, and hierarchical relationships within the organisation - the authority systemThe planned and formalised policies and procedures and controls that guide the activities and relationships of people in the organisation - the administrative system
DifferentiationThe state of segmentation of organisational systems into components.
– Vertical differentiation:- decision making and authority at different levels in the organisation
– Horizontal differentiation:- tasks; units, etc, differences at the same level of hierarchy
IntegrationThe degree of co-ordination and control which exists between the various levels and activities of the organisation.
Conventional integration mechanisms:- rules, policies, procedures, hierarchical referral– Non-conventional integration mechanisms -
management into-systems, integrator roles, cross functional teams, re-organisation into a matrix structure
Co-Ordination MechanismsMutual adjustmentDirect supervisionStandardisation:– work processes– outputs– skills and/or knowledge– norms or values
necessary because of differentiation and division of labour
Basic View Of "Strategy-Structure" Relationship
strategy structure
“fit”
Crucial Elements Of Chandlers Thesis
1. Organisation structure follows the growth strategies of the firm.
2. USA firms had followed a stage or stepwise process of development of strategies and structures.
3. Organisations do not change their structures until provoked by inefficiencies to do so.
4. Added later by Drucker and Miles and Snow:"structure constrains strategy".
Organisational Design VariablesProduct/market policies
Taskuncertainty
diversityinterdependence
Reward Systemscompensation
promotionleadership style
job design
Information & Decision Processesplanning & control
budgetingintegration mechanismsperformance measures
Peoplerecruitment, selectiontransfer & promotion
training & development
Structuredivision of labour
departmentalisationshape
distribution of power
Success
Approaches To Organisational Design
The One Best Way Approach– e.g. scientific management, bureaucracy, administrative management,
management by objectives, long range planning, organisational development and so on.
– All organisations should be of the same design.
The Contingency Approach– e.g. it all depends upon the situation facing the firm.
The situation determines the design.
The Configuration/Context Approach– e.g. design parameter and situational factors cluster together into internally
consistent groupings.
Design and situation relationship is symbiotic not deterministic.
Organisation Design (1)Individual positions
– job specialisation– behaviour formalisation– training– indoctrination
The skeletal structure– bases for establishing groupings
• function/activity– knowledge, skill, process, function
• market– output, client, place
• (time may be a sub category of either)– size of units
Organisation Design (2)
Design of lateral linking devices– liaison devices– planning and control systems
Design of decision making systems– centralised– decentralised
Basic Contingency Model
OrganisationDesign
OrganisationEffectiveness
OrganisationEnvironment
Situational Factors (1)Perception of environment Age– of industry
• different configurations favoured at different times.– of organisation
• increasing age increasing formalisation
Size of organisation– growth leads to increasing average unit size,
increasing formalisation, more elaborate configuration
Situational Factors (2)Technical system in operating core
– regulatory systems• formalisation and bureaucracy
– complexity• elaborate administrative system and selective decentralisation
– automation• organic administrative systems
Power– increasing external control, centralisation & formalisation– individuals favour centralisation– fashion overrides common sense
Why Do Configurations Exist?
The ”Darwinian" Perspective– survival of the fittest
The ”Harmony” Perspective– consistency, synergy, strategic fit
The ”Quantum Leap” Perspective– approach to strategic change
Six Basic Elements Of The Organisation
the strategic apexthe middle linethe technostructurethe support staffthe operating corethe ideology
Six Basic Elements Of The Organisation
Six Structural Configurationsthe simple structure
– pull to centralise
the machine bureaucracy– pull to standardise
the professional bureaucracy– pull to professionalise
the divisionalised form – pull to balkanise
the adhocracy– pull to collaborate
the missionary– pull to evangelise
The Simple Structure (1)
Key co-ordinating mechanism
direct supervision
Key element
strategic apex
The Simple Structure (2)
Design parametersSpecialisation - little
Training - little
Indoctrination - little
Formalisation of behaviour - little
Style - organic
Groupings - functional
Unit size - wide
Planning and control - no formal systems
Liaison devices - few
Decision making power - centralised
Situational factorsAge and size - young and small
Technical system - simple, not regulatory
Environment - simple, dynamic (hostile?)
Power source - Managing Director authority and control
The Entrepreneurial Context (1)
Dominated by a single individual, with clear and distinct mission, directing a responsive organisationnew organisationssmall organisationscrisis organisationsautocratic organisationscharismatic organisationsentrepreneurial organisations
The Simple Structure
The Entrepreneurial Context (2)
Environment tends to be:• simple• dynamic• nichés in existing fragmented mature industries
Advantages• centralisation• strong ideology• effective in some situations
Disadvantages• confusion• inefficient• vulnerable to loss of leader• narrow environment range• leader resists change• abuse of authority
The Machine Bureaucracy (1)
Key co-ordinating mechanism
standardisation of work
Key element
technostructure
The Machine Bureaucracy (2)Design parameters
Specialisation - high; vertical & horizontalTraining - littleIndoctrination - littleFormalisation of behaviour - highStyle - bureaucraticGroupings - functionalUnit size - wide in operating core, narrow elsewherePlanning and control - action planningLiaison devices - fewDecision making power - limited horizontal decentralisation
Situational factorsAge and size - old and large
Technical system - simple, not automated or sophisticated
Environment - simple, stable
Power source - technocratic and external
The Mature Context (1)An integrated set of simple, repetitive tasks must be performed precisely and consistently by human beingsFound in:- older mature organisations with regulatory technical systems.Strong external control by dominant stakeholderRegulatory functionsSafety conscious organisations
The Machine Bureaucracy
The Mature Context (2)Environment tends to be:• simple• stable• demanding mass provision of goods and services
Advantages• control / accuracy• certainty / precision• efficiency (?)
Disadvantages• boring, repetitive work• inflexibility• conflict• limited scope of personal development
The Professional Bureaucracy (1)
Key co-ordinating mechanism
standardisation of skillsKey element
operating core
The Professional Bureaucracy (2)Design parameters
Specialisation - high in horizontal plane
Training - high
Indoctrination - little
Formalisation of behaviour - little
Style - bureaucratic
Groupings - functional and market
Unit size - wide in operating core, narrow elsewhere
Planning and control - little
Liaison devices - roles in administration
Decision making power - horizontal decentralisation
Situational factorsAge and size - variable
Technical system - not regulatory or sophisticated
Environment - complex and stable
Power source - professional operator control
The Professional Context (1)Organisations designed to deal with stable yet high complex working patternsOrganisations tend to be:public servicepersonal service orientatedmissing regulatory, sophisticated or automated technical systemsstrong operating core & support staff bases
The Professional Bureaucracy
The Professional Context (2)Environment tends to be:• stable• complex
Advantages• Democratic• provides extensive
autonomy
Disadvantages• lack of control• co-ordination difficulties• discretion over use of standard programmes• innovation• inflexibility
The Divisionalised Form (1)
Key co-ordinating mechanism
standardisation of outputsKey element
middle line
The Divisionalised Form (2)Design parameters
Specialisation - high in horizontal and vertical planeTraining - littleIndoctrination - some in key rolesFormalisation of behaviour - highStyle - bureaucraticGroupings - marketUnit size - wide at topPlanning and control - high performance controlLiaison devices - fewDecision making power - limited vertical integration
Situational factorsAge and size - old and very large
Technical system - divisible, often mirroring machine bureaucracy
Environment - diverse
Power source - middle line control
The Diversified Context (1)A set of quasi-autonomous units coupled together by a central administrative structureOrganisations have diverse markets created by product/service or client or regional segmentation.Client and regional segmentation encourages superimposition of machine bureaucracy in operating coreTechnical system divisible into efficient units.Larger, older firms.
The Divisionalised Form
The Diversified Context (2)Environment tends to be:• multiple• simple• static
Advantages• strategic flexibility• efficient allocation
of capital• helps personal
development• spreads risk• responsiveness
Disadvantages• expensive duplication• lack of central control• extended shareholder
grouping• lack of synergy• quantitative
performance measures
The Adhocracy (1)
Key co-ordinating mechanism
mutual adjustmentKey element
support staff
The Adhocracy (2)Design parameters
Specialisation - high in horizontal plane
Training - high
Indoctrination - some
Formalisation of behaviour - little
Style - organic
Groupings - functional and market
Unit size - narrow
Planning and control - limited action planning
Liaison devices - many and various
Decision making power - selective decentralisation
Situational factorsAge and size - young
Technical system - sophisticated and automated or simple and non-regulatory
Environment - complex and dynamic
Power source - expert control
The Innovation Context (1)Organisations designed to deal with complex technologies and systems under conditions of severe dynamism.
Organisations tend to be:-
operating adhocracy
administrative adhocracy
entrepreneurial adhocracy
competitive adhocracy
temporary adhocracy
mammoth project adhocracy
automated adhocracy
Young organisations - age breeds standardisation
The Adhocracy
The Innovation Context (2)Environment tends to be:• dynamic• complex
Advantages• copes with difficult conditions• provides challenges• very effective
Disadvantages• confusion and ambiguity• inefficient• internal politics and conflict• group goals must dominate• unbalanced workloads• drift towards other configurations
The Missionary Organisation (1)
Key co-ordinating mechanism
standardisation of normsKey element
ideology
The Missionary Organisation (2)
Design parametersSpecialisation - littleTraining - littleIndoctrination - highFormalisation of behaviour - littleStyle - bureaucraticGroupings - marketUnit size - widePlanning and control - littleLiaison devices - fewDecision making power - decentralised
Situational factorsAge and size - middle range
Technical system - simple and non-regulatory
Environment - simple, usually stable
Power source - ideological control
Configurations as One SystemSimple Structure
Machine Bureaucracy Professional Bureaucracy
Divisionalised Form Adhocracy
Ageing
hostility
Professionalism
hostility
dynamism
complexity
rationalisation
dive
rsifi
catio
n
cons
olid
atio
n
complexity
complexity
hostility
fragmentation
automation
sophistication
success in one area
dyna
mis
m
Age
ing
/ su
cces
s
A Portfolio Of Configuration At The Business Level
Cash Cows
machine or
professional bureaucracies
R & D
adhocracies
Dogs
machine or
professional bureaucracies
Question Marks
adhocracies or
simple structures
Stars
simple structures