Chapter 11: Organisation Design 1
2 Learning Objectives After completing this chapter, students will be able to: Describe six key elements in organisational design. Contrast mechanistic and organic structures. Discuss the contingency factors that favour either the mechanistic model or the organic model of organisational design. Describe traditional organisational design options. Discuss organising flexibility in the 21st century. Develop your skill at acquiring and using power. Know how to stay connected and in the loop when working remotely.
3 Elements of Organisational Design Organising: management function that involves arranging and structuring work to accomplish the organisation s goals Organisational structure: the formal arrangement of jobs within an organisation Organisational chart: the visual representation of an organisation s structure Organisational design: creating or changing an organisation s structure
Purposes of Organising 4
5 Work specialisation Work specialisation: dividing work activities into separate job tasks
Economies and Diseconomies of Work 6
7 Departmentalisation Departmentalisation: the basis by which jobs are grouped together
The Five Common Forms of Departmentalisation (1 of 3) 8
The Five Common Forms of Departmentalisation (2 of 3) 9
The Five Common Forms of Departmentalisation (3 of 3) 10
11 Cross-Functional Team Cross-functional team: a work team composed of individuals from various functional specialties
12 Chain of Command Chain of command: the line of authority extending from upper organisational levels to the lowest levels, which clarifies who reports to whom
13 Authority Authority: the line of authority extending from upper organisational levels to the lowest levels, which clarifies who reports to whom Line authority: authority that entitles a manager to direct the work of an employee Staff authority: positions with some authority that have been created to support, assist, and advise those holding line authority
14 Responsibility Responsibility: the obligation or expectation to perform any assigned duties Unity of command: the management principle that each person should report to only one manager
15 Span of Control Span of control: the number of employees a manager can efficiently and effectively manage
16 Contrasting spans of controls If one organisation has a span of four and the other a span of eight, the organisation with the wider span will have two fewer levels and approximately 800 fewer managers.
17 Centralisation and Decentralisation Centralisation: the degree to which decision making is concentrated at upper levels of the organisation Decentralisation: the degree to which lower-level employees provide input or actually make decisions
Factors that affect an organisation s use of Centralisation and Decentralisation 18
19 Employee Empowerment Employee empowerment: giving employees more authority (power) to make decisions
20 Formalisation Formalisation: how standardised an organisation s jobs are and the extent to which employee behaviour is guided by rules and procedures
21 Mechanistic and Organic Structures Mechanistic organisation: an organisational design that is rigid and tightly controlled Organic organisation: an organisational design that is highly adaptive and flexible
Mechanistic vs. Organic Organisations 22
23 Strategy and Structure An organisation s structure should facilitate goal achievement. Because goals are an important part of the organisation s strategies, it is only logical that strategy and structure are closely linked.
24 Size and Structure There is considerable evidence that an organisation s size affects its structure, but once an organisation grows past a certain size, size has less influence on structure.
25 Technology and Structure Unit production: the production of items in units or small batches Mass production: the production of items in large batches Process production: the production of items in continuous processes
Mechanistic vs. Organic Organisations 26
27 Environmental Uncertainty and Structure In stable and simple environments, mechanistic designs can be more effective. The greater the uncertainty, the more an organisation needs the flexibility of an organic design.
28 Traditional Organisational Design Options Simple structure: an organisational design with little departmentalisation, wide spans of control, centralised authority, and little formalisation Functional structure: an organisational design that groups together similar or related occupational specialties Divisional structure: an organisational structure made up of separate, semiautonomous units or divisions
Traditional Organisational Designs Strength and Weaknesses 29
30 Team Structures Team structure: an organisational structure in which the entire organisation is made up of work teams
31 Matrix and Project Structures Matrix structure: an organisational structure that assigns specialists from different functional departments to work on one or more projects Project structure: an organisational structure in which employees continuously work on projects
Example of a Matrix Organisation 32
33 The Boundaryless Organisation Boundaryless organisation: an organisation whose design is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure Virtual organisation: an organisation that consists of a small core of full-time employees and outside specialists temporarily hired as needed to work on projects
34 Task Forces Task force (or ad hoc committee): a temporary committee or team formed to tackle a specific short-term problem affecting several departments Open innovation: opening up the search for new ideas beyond the organisation s boundaries and allowing innovations to easily transfer inward and outward
Benefits and Drawbacks of Open Innovation 35
36 Telecommuting Telecommuting: a work arrangement in which employees work at home and are linked to the workplace by computer
37 Compressed Workweeks, Flextime, and Job Sharing Compressed workweek: a workweek where employees work longer hours per day but fewer days per week Flextime (or flexible work hours): a scheduling system in which employees are required to work a specific number of hours a week but are free to vary those hours within certain limits Job sharing: the practice of having two or more people split a full-time job
38 The Contingent Workforce Contingent workers: temporary, freelance, or contract workers whose employment is contingent on demand for their services
39 Review Learning Objective 11.1 Describe six key elements in organisational design: 1. Work specialisation 2. Departmentalisation 3. Chain of command 4. Span of control 5. Centralisation / decentralisation 6. Formalisation
40 Review Learning Objective 11.2 Contrast mechanistic and organic structures: Mechanistic structure: rigid, tightly controlled Organic structure: highly adaptable, flexible
41 Review Learning Objective 11.3 Discuss the contingency factors that favour either the mechanistic model or the organic model of organisational design: An organisation s structure should support the strategy. Structure can be affected by size and technology. Organic structure is most effective with unit production and process production technology. Mechanistic structure is most effective with mass production technology.
42 Review Learning Objective 11.4 Describe traditional organisational design options: Simple structure: little departmentalisation, wide spans of control, authority centralised in one person, and little formalisation. Functional structure Divisional structure
43 Review Learning Objective 11.5 Discuss organising for flexibility in the twenty-first century: Structures: Team Matrix Project Boundaryless organisation Virtual organisation Compressed workweeks, flextime, job sharing Contingent workforce