Organisational Structure and Design

Organisational structure

• The organisational structure should maximise the use of resources.
• The determinants of organisational structure are: 1. The organisational environment 2. Strategy 3. Technology 4. Human resources

Organisational environment

• Quickly changing environment: flexible structure, change and innovation, decentralize authority, empowerment of employees.
• Slowly changing environment: Formal structure, obedience and team players, standard procedures, government of employees’ activities.

Strategy

• Differentiation: increasing quality, flexible structure, innovation.
• Low-cost strategy: cost control, formal structure, conservative norms and control.

Technology

• Nonroutine tech: flexile structure to quickly respond to unexpected situations

Routine tech: formal structure because tasks are simple.

Task variety and task analysability are the factors which determine the complicatedness of technology.

Human resources

• Highly skilled workforce, great number of employees = flexible and decentralised structure.

Organisational design

• Organising choices are made about two issues: 1. How to group tasks into individual jobs (job design) 2. How to group jobs into functions and divisions (types of organisational structures).
• Job design: about division of labour to increase efficiency and effectiveness.

Either: Job simplification, which is reducing the number of tasks per worker, or Job enlargement, which is increasing the number of tasks per employee. You have to find a balance between greater specialisation and the boredom of a repetitive activity.

Alternative: Job enrichment is increasing the responsibility that the worker has over his job and encourage him to develop new skills.

• A job is motivating if it has: Skill variety; Task identity; Task significance; Autonomy; Feedback.

Types of organisational designs

• Initially managers group jobs into departments and develop a functional structure, as it grows, they should design a divisional or matrix structure.
• Functional structure:

Advantages: 1. Being grouped, people learn one from the other 2. Easily monitored by managers 3. Managers may create a set of functions (group of people with similar jobs) to monitor the competitive environment.

Disadvantages: 1. Difficult for managers in different functions to communicate 2. Functional managers may lose sight of organisational goals.

• Divisional structure: divided in three types: product, geographic and market structure.

Advantages: 1. clear identification of any money flow 2. Responsiveness to customer needs 3. Coordination within functions 4. Focus on certain areas.