Module 3: Organisational Design

Question 1

Alfred D. Chandler

Answer 1

“Structure follows strategy”

Question 2

Why is structure considered an element of corporate strategy?

Answer 2

Because structure facilitates the achievement of organisational goals through:
- horizontal differentiation (the degree of task specialisation across the hierarchy)
- vertical differentiation (the depth of hierarchy)

Question 3

What are the benefits of having an org. structure besides being crucial for strategy implementation?

Answer 3

• Structure facilitates flow of information within the company to reduce uncertainty in decision-making.

Question 4

What is the hallmark of a good organisational structure?

Answer 4

• The org. structure achieves effective coordination and integration of the diverse activities occurring within the firm.

Question 5

Can strategy be constrained by structure?

Answer 5

Yes - because of ‘path dependency’ - existing structures may constrain future strategies.

Question 6

What are the key features of structure?

Answer 6

• Effective information flows: company has a set of formal tasks assigned to individuals & departments
• Effective decision-making: company has formal reporting relationships in place to control information
• Effective coordination & integration: company has designed systems to ensure effective coordination of employees across departments.

Question 7

Structure is…

Answer 7

• Vertical & horizontal differentiation to divide big tasks of the whole organisation into smaller tasks of subunits (Mintzberg, 1983).

Question 8

Structure is…

Answer 8

• Integration of smaller subunits to realise the organisation’s goals (Mintzberg, 1983).

Question 9

What are the two competing objectives of structure?

Answer 9

• Stability
• Flexibility

Question 10

Stability

Answer 10

Bureaucracy:
- rules
- policies & procedures
- Formalisation

Question 11

Flexibility

Answer 11

Emergence:
- self-organising
- rules are looser
- greater individual engagement & initiative

Question 12

What is the manager’s role in deciding the organisational structure?

Answer 12

• Managers need to evaluate which model (or coordinating mechanism) is most appropriate for the organisation’s particular circumstances.
• the company’s purpose must evolve should it move toward the emergent end of the coordination spectrum.

Question 13

What is the significance of the organisational configuration (structure)?

Answer 13

The shape of the organisational configuration will affect its complexity. It will determine whether a company gives priority to stability or flexibility.

Question 14

What are the practical design questions related to organisational complexity? (Burton, DeSanctis, & Obel, 2006)

Answer 14

Manager’s make these choices in terms of efficiency & effectivness:
- the width of specialisation for the firm (number of departments or subunits).
- the span of control for the firm (number of individuals reporting to a manger)
- the delayering of the firm to eliminate middle management
- the scope in a divisional configuration
- the limitation on the number of functions & divisions in the matrix configuration.

Question 15

What is efficiency?

Answer 15

Getting the maximum amount of output with the same (or lesser) level of input (e.g. a company uses its resources to maximum advantage and achieves desired results e.g. minimal time or minimal waste of resources).

Question 16

What is effectiveness?

Answer 16

Ability to achieve desired outcomes (a company achieves their goals / optimal results- and they are able to do it well e.g. obtain highest quality outputs).

Question 17

What is the span of control?

Answer 17

The horizontal complexity or width of the organisation, usually measured as the number of individuals reporting to a manager.

Question 18

What are the key issues addressed (raised) by organisational configuration?

Answer 18

• Information processing
  > who has access to the information?
• Coordination
  > How will tasks be completed effectively?
• Control
  > Who makes the decisions?