3.1 Organisational structure Flashcards
Organisational structure is formed by:
- the grouping of people into departments or sections and the allocation of responsibility and authority
Mintzberg suggested that an org can be analysed into:
six building blocks and that effective co-ordination will be needed in order to integrate the blocks into one cohesive unit. (pg 46)
- Operating core
- Strategic apex
- Middle line
- Technostructure
- Support staff
- Ideology
Operating core:
- this is the basic work of the org - individuals who perform the tasks of producing goods or providing service (smaller org mostly made up of this block)
Strategic apex:
higher levels of management responsible for formulating strategies and long-term plans
Middle line:
links the strategic apex to the operating core and includes middle and lower level management
Technostructure:
- responsible for designing procedures and standards (accountants, computer specialists and engineers)
- provides support for technical structures by coordinating and standardizing work
Support staff:
provides services (sales and marketing / HR management) to the org. which supports operations / production.
Ideology:
Org values and beliefs (culture)
The coordinating mechanisms that integrate the building blocks into a cohesive unit are:
- Mutual adjustment - Coordination through informal contact
- Direct supervision - Coordination through formal hierarchy
- Standardisation of work processes - and specified operating procedures
- Standardisation of outputs - product and service specifications
- Standardisation of skills and knowledge - identifies training needs and necessary skills base to do the work
- Standardisation of norms - cultural norms and expectations
Mintzberg combined the building blocks and coordinating mechanisms in different ways and identified five main structural configurations (differ from bus to bus):
Structural config (eg) - Key Building block - Key Coordinating mech
Simple structure (newsagent) - Strategic apex - Direct supervision
Machine bureaucracy (heavily unionized org) - Techno structure - Standardisation of work
Professional bureaucracy (hospital) - Operating core - Standardisation of skills
Divisionalised (org split into bus units for each product sold) - Middle line - Standardisation of outputs
Adhocracy/Innovative (advertising agency) - Operating core / support staff - Mutual adjustment
There are different categories of structures appropriate to bus at various phases of their lives, typical pattern of structural change would be as follows:
- Entrepreneurial structure
- functional structure
- divisional structure
- matrix structure
Entrepreneurial structure: (pg 49)
- is built around the owner-manager
- typical of smaller bus (early stages of development)
- is totally centrallised with al key decisions being made by the strategic leader (often the owner/entrepreneur in an owner-managed bus)
Advantages of entrepreneurial structure:
- Fast decision making - only one person is making decisions
- Good control - the small size and few layers of management means the entrepreneur has good control over workforce and decisions with org which leads to better conformity to goals
- More responsive to market - as soon as something in the market changes the entrep can recognise it and be able to react to it
- Close bond to workforce - the entrep and employees work closely together
Disadvantages of entrepreneurial structure:
- Success is dependent on the capabilities of the owner-manager
- Lack of career structure - for employees due to small size of bus
- Cannot cope with diversification / growth - the owner-manager won’t be able to cope with for eg increased volume of decisions due to bus becoming more successful and therefore bigger
Functional structure: (pg 50)
- Common in org that have outgrown the entrep structure,
- employees that perform similar tasks are grouped into departments
- this will lead to a longer chain of command
- Most appropriate for smaller org with few products and locations and in a relatively stable environment
The chain of command is
- the series of positions of authority or rank within an org that are ordered from top to bottom, creating a formal line of communication, responsibility and authority
Advantages of functional structure:
- Economies of scale - roles and activities are grouped together and not duplicated leading to lower costs
- Chain of command - creates a formal line of communication, responsibility and authority and makes growth or diversification more manageable
- Standardisation of outputs and systems - similar activities are grouped together leading to standardisation and focus on quality
- Specialists more comfortable - people with similar skills are grouped together and don’t feel isolated
- Career opportunities - employees can work their way up through the function
Disadvantages of functional structure:
- Empire building and conflict between functions - Functional managers might make decisions which increase their own power or best for their function instead of whats best for org overall
- Slow to adapt to market changes - decision making may be slow due to a longer chain of command
- Can’t cope with rapid growth or diversification - specialists in production function may not be able to cope with making a new product
Divisional structure: (pg 51)
- occurs where a bus is split into several divisions (strategic bus units)
- each one autonomously responsible for a product line/brand or geographical location (particularly highly specialised products)
- Headed by general mangers who take responsibility for their own resources
Advantages of divisional structure:
- Enables product or geographical growth - struc can easily be adapted for growth or diversification
- Clear responsibility - divisions managers should be able to clearly see where their areas of responsibility are
- Training of general managers - less focus on specialisation should result in managers having a wider view of org.
- Decision making - Placing responsibility of divisional profitability at divisional level should increase the speed and quality of decisions (due to local knowledge)
- Top management free to concentrate on strategic matters
Disadvantages of divisional structure:
- Duplication of bus functions - each division will have it’s own function resulting in more managers
- Lack of goal congruence - divisions may make decisions to benefit themselves to detriment of overall org.
- Potential loss of control - due to autonomy given to divisions and it’s managers
- Allocation of central costs can be a problem
- Specialists may feel isolated
Matrix structure: (pg 53)
- aims to combine the benefits of divisional and functional structure
- usually found in multi-product and multi-functional org. with significant interrelationships and interdependencies
Advantages of matrix structure:
- Advantages of both functional and divisional structures
- Flexibility - offers flexibility to coordinate the tasks and people required in more complex situations
- Encourages teamwork and the exchange of opinions and expertise
Disadvantages of matrix structure:
- Dual command - team members may have to answer to a product manager and a functional manager resulting in potential confusion, stress and conflict
- Dilution of functional and divisional authority
- Lack of individual accountability
- Time-consuming meetings
Another method of analysing structures is by the degree of:
Autonomy or the level at which decisions are made:
- Centralised structure - upper levels of org’s hierarchy have authority to make decisions
- Decentralised structure - authority to make decisions is passed down to units and people at lower levels
Most org will operate to a degree of both centralised and decentralised decision making and the extent will be influenced by:
- Management style - managers who want to retain control may operate a centralised structure
- Ability of management / employees - the more employees can be trusted with making decisions the more decentralised
- Geographical spread - more spread would lean towards decentralised
- Size of the org - more centralised for smaller org
- Ideology - the org values and beliefs could influence the degree
Advantages of decentralisation
- Senior management free to concentrate on strategy
- Better local decisions due to local expertise
- Better motivation for employees due to increased empowerment and a more defined career path
- Quicker responses / flexibility due to reduced bureaucracy and increased autonomy
Disadvantages of decentralisation:
- Loss of control by senior management and lack of standardisation
- Dysfunctional decisions due to lack of goal congruence
- Poor decisions made by inexperienced managers
- Training costs
- Duplication of roles
- Extra costs in obtaining info stored in several locations
Org can also be classed as: (pg 58)
- tall or flat depending on length of the scalar chain and the breadth of the span of control
The scalar chain is the:
- line of authority that can be traced up or down the chain of command, from most senior to jnr
- it relates to the number of levels of management
The span of control considers
- how many people report to one superior
Factors that influence the span of control:
- Nature of the work - the more repetitive or simple, the wider the span can be
- Type of personnel - more skilled and motivated the wider the span of control
- Location of personnel - personnel located locally allows for wider span of control
A tall org has
- many levels of management (a long scalar chain) and a narrow span of control
- tend to be more bureaucratic and take longer to make decisions due to large number of levels of management that need to be involved
A flat org has
- few levels of management (a short scalar chain) and a wide span of control)
- tend to have weaker control and fewer chances for employees to progress as fewer middle management positions available
