12 - Organisational structure and design Flashcards
Should structure come before strategy or should strategy come before structure?
Trick question! - depends on the circumstance - sometimes structure would be too hard to change
Chandler - traditional view of structure/strategy
Strategy should come before structure - once strategy is devised, orgs need to determine what is required to deliver vision, and this will lead to the required structure forming
Quinn - more modern view of structure/strategy
‘Strategy then structure’ oversimplifies what actually happens within an org - structure is intertwined with strategy and both will lead and follow at different stages
Robbins and Judge - 6 key elements that ought to be considered when designing organisational structure
- Specialisation
- Departmentalisation
- Chain of command
- Span of control
- Levels of centralisation
- Formalisation
Simple organisational structure
Business run by single manager-owner, employees underneath, limited lines of hierarchy
3 advantages of simple structure
- Clarity of accountability
- Wide spans of control
- Centralised authority
3 disadvantages of simple structure
- Need for manager to deal with every aspect of business
- Rigidity can prevent personal progression
- Focus on day-to-day rather than strategy
Functional organisational structure
Manager
Function heads
Employees
3 advantages of functional structure
- Flexibility and breadth of senior skills
- Focused decision-making structure
- Opportunities for people progression
3 disadvantages of functional structure
- Duplication of tasks, lack of centralisation
- Differing values between functions
- Short-termism - ‘what is best for my function?’
What are the ‘functions’ in a functional structure?
Finance, sales, production, etc.
Divisional organisational structure
CEO
Directors
Managers
Employees
3 advantages of divisional structure
- Separation of strategic from operational
- Responsiveness to external environment
- Opportunities to grow management skills and talent
3 disadvantages of divisional structure
- Loss of central control with inter-division competitiveness
- Expensive solution with duplication of function across divisions
- Image and quality differentiation
What does a matrix business structure look like?
Combination of functional and divisional, leading to duel lines of accountability (functional head and divisional head)
3 advantages of matrix structure
- Specialised skills can be used across divisions
- Resources are shared more easily, improving efficiency
- Flexibility can lead to removal of silo thinking
3 disadvantages of matrix structure
- Risk of power struggles across seniors
- Uncertainty about accountability/reporting lines
- Hard-workers can become overburdened
4 types of multi/transnational structures, and whether they are high or low:
- local independence and responsiveness
- global co-ordination
- International divisions (low, low)
- Local subsidiaries (high, low)
- Global product divisions (low, high)
- Transnational corporations (high, high)
4 advantages of joint venture form of strategic alliance
- retention of individual autonomy and structure
- liability limited
- reduces reputational damage
- net accounting basis
3 disadvantages of joint venture form of strategic alliance
- reporting and compliance add to admin burden
- guarantees may exceed limited liability and increase costs
- how will resources be allocated and revenue be split?
3 key attributes of traditional structural form
Centralised
Bureaucratic
Structured
3 key attributes of empowered structural forms
Devolved
Participative
Fluid
Empowered structural forms - 3 key aspects
- Flexibility (3 dimensions)
- Boundary-less orgs (4 dimensions)
- Virtual structures
3 dimensions of flexibility required for firms in modern age (re. structure)
Functional - ability to redeploy eees quickly and smoothly
Numerical - ability to change numbers of people required in line with tasks being completed
Financial - need for different methods of remunerating employees to enable functional and numerical flexibility
Johnson et al. - 3 key challenges that need to be recognised by 21st century organisations and included within business srtuctures
- Speed of change and increasing uncertainty
- Importance of knowledge creation and sharing
- Acceptance that markets recognise few geographic boundaries (world is more globalised)
What is a boundary-less concept of structure really known to mean?
Appreciative of the movement to flexibility of structures in the modern age - does not actually mean there are no boundaries/structure
4 dynamics which need to be flexible in an org (re. boundary-less)
Vertical - Guys at top need to know what guys at bottom think, vice versa
Horizontal - Limitation of silo boundaries
External - Customers, suppliers, regulators need to be viewed as stakeholders
Geographic - Understanding of need to behave differently in different cultures
Handy’s shamrock organisation explained
3 arms to a modular organisational structure
- Core workers (full-time)
- Peripheral workers (part time, consultancy, etc.)
- Contract workers (cleaners, etc.)
A company with which type of structure would have only a ‘net’ existence?
Virtual structure
Lynch - 3 key questions for an org to ask when designing structural form
- What kind of organisation are we, and do we want to be anything different?
- Who are our influential stakeholders?
- What is our purpose (vision, mission, objectices goals)?
What is often a simple solution to restructuring when opening a new line of business
Creating a new division within current divisional structure
Other than the ‘group structure’ of an organisation, what is is relevant to organisational structure and design?
The structure of the board
