Organisational Structure. Professor Ming Sun School of Energy, Geoscience, Infrastructure & Society Heriot-Watt University

Transcription

1 Organisational Structure Professor Ming Sun School of Energy, Geoscience, Infrastructure & Society Heriot-Watt University

2 DEFINITION OF ORGANISATION

3 What is an Organisation? The planned co-ordination of the activities of a number of people for the achievement of some common, explicit purpose or goal, through division of labour and function, and through a hierarchy of authority and responsibility Schein E. H. (1988) Organizational Psychology, third edition, Prentice Hall, p15

4 Basic Components of an Organisation Structure Top management Middle management Operational core Organisational support Operational support

5 ORGANISATION STRUCTURE

6 Key Elements of Organisation Structure Design Naoum (2011) identified the following key elements associated with organisation structure: Group formation Communication networks Power and authority Centralisation and decentralisation Mechanistic and organic systems Span of control

7 Group Formation It is about setting up divisions, department and work sections. Grouping is usually done by knowledge and skills, by work process and function, by time, by output, by client, by place, by project, etc. The purpose of grouping is both achieving organisational objectives and satisfying personal needs of staff members.

8 Communication Networks Communication networks enable information flow within an organisation. Their effectiveness has a direct impact on the performance of the organisation.

9 Power and Authority Power and authority describe the relationship between individuals in different positions in an organisation structure. Power refers to the ability of one person to carry out his/her will; and authority refers to a person s right of decision making. Allocation of power and authority is an important consideration when deciding organisation structure.

10 Centralisation and Decentralisation Most organisation structures are in a form of hierarchy. In a highly centralised organisation, power is mainly located at the top of the hierarchy structure. In a decentralised organisation, power is usually dispersed to lower levels of the hierarchy.

11 Mechanistic and Organic Systems Mechanistic systems: formal structure; emphasis on functional specialisation; bureaucratic. More suitable for stable conditions. Organic systems: importance of special knowledge and unique skills; roles are allowed to adjust. More suitable for changeable conditions.

12 Span of Control Span of control refers to the number of subordinates under the supervision of one manager. Narrow span of control means fewer subordinates and a tall hierarchy structure. Wide span of control means more subordinates and a flat structure.

13 Factors Affecting Organisational Design Environment Strategy Determine design of organizational structure Technology Source: Gareth R Jones & Jennifer M George, (2007), Contemporary Management, published by McGraw-Hill Higher Education Human Resources

14 Determinants of Structure The environment: The quicker the environment changes, the more problems face managers. Structure must be more flexible when environmental change is rapid. Usually need to decentralize authority. Strategy: Different strategies require the use of different structures. A differentiation strategy needs a flexible structure, low cost may need a more formal structure. Increased vertical integration or diversification also requires a more flexible structure.

15 Determinants of Structure Technology: The combination of skills, knowledge, tools, equipment, computers and machines used in the organization. Human Resources: the final factor affecting organizational structure. Higher skilled workers who need to work in teams usually need a more flexible structure. Higher skilled workers often have professional norms (CPA s, physicians). Managers must take into account all four factors (environment, strategy, technology and human resources) when designing the structure of the organization.

16 Factors influencing organisation structure Similar idea is offered by Shamil Naoum (2011) on the factors influencing the design of organisational structure.

17 Naoum s Three Types of Organisational Structure Shamil Naoum broadly divided organisational structure into three types: Simple structure Functional structure Matrix structure

18 Simple Structure Informal line relationship between members Centralised power Wide span of control Direct supervision Single decision making Fast reaction to a dynamic environment

19 Functional Structure Functional grouping of specialists Decentralisation of function power Narrow span of control Direct and indirect control Formal communication Slow to react to a dynamic environment

20 Matrix Structure Larger projects, with an organisation, require skills of different functional departments. The conventional vertical functional structure is overlaid by horizontal project based lateral authority, influence or communication.

21 Characteristics of Project based Organisations Decisions are not repetitive. Early decisions have impact on later decisions. Learning time for members is limited. Work pattern is not well defined. Personnel are drawn from many organisations (matrix structure). Personnel may work on multiple projects simultaneously (matrix structure). Project organisation changes over different stages.

22 Advantages of Matrix Structure Efficient use of resources where expertise can be shared by multiple projects Integration of different disciplines to create team spirit High-quality and fast decision making with support of different experts Balance the conflicting objectives of the client with that of the business An individual can make on multiple projects simultaneously and it makes the tasks more varied and interesting

23 Disadvantages of Matrix Structure Role ambiguity leads to confusion as to who is responsible for what. It can also lead to role overload; an individual is given too much by different superiors. Project manager may not have full authority and control over staff from functional departments.

24 Mintzberg s Five Types of Organisation Structure Henry Mintzberg identified five different structures: Small, or entrepreneurial, structure Machine bureaucracy Divisionalised structure Professional bureaucracy Adhocracy

25 Small, or Entrepreneurial, Structure Simple, informal, flexible Little or no middle-line hierarchy Activities revolve around the chief executive Controls through direct supervision

26 Machine Bureaucracy Centralised bureaucracy with formal procedures Clear division of labour with function grouping Extensive hierarchy Government departments

27 Divisionalised Structure Market based, autonomous divisions Central administrative headquarters Each division may adopt a Machine Bureaucracy structure Large construction companies

28 Professional Bureaucracy Bureaucratic yet decentralised Rely on many individual professionals Universities, hospitals

29 Adhocracy Fluid and organic Multi-disciplinary teams Matrix structure A project based consulting or R&D company

30 Organisational Evolution

31 Learning Outcomes Students should know the main components of a typical organisation; Students should understand the main elements of organisation design; Students should know the influencing factors or main determinants of organisation design; Students should know the main features and applicability of five organisation structures suggested by Henry Mintzberg; Students should understand the main characteristics of project based organisations.