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What is Formal Organisational Structure?
- The way in which the various parts of an organisation are formally arranged
- It represents the way an organisation intends to function
- Structure’s main aim is to improve the effectiveness of an organisation achieving its goals
- • Note: The way we put people and jobs together, and define their roles and relationships is an important determinant in whether an organisation is successful in achieving its goals
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Formal Structure
reporting relationships and formal arrangements of work positions
created by the organisation.
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Nature of Organisational Structure
- Job Design
- Organisational Form - Departmentalisation
- Differentiation
- Integration
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Informal Organisational Structure
- ‘Shadow’ organisation
- Unofficial* but often critical working relationships between organisational staff
- created by the staff, NOT the organisation
- It cuts across all levels of the organisation – people meeting for coffee, exercise groups etc
- Very personal and network oriented
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What you learn from an organisational chart
- 1. Division of work
- 2. Supervisionary relationships
- 3. Communication channels
- 4. Major submits
- 5. Level of management
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Advantages of informal structure
- emotional support and social needs
- informal learning
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Disadvantages of informal strucuture
- Activities go against best interests of org
- susceptible to rumour, carry inaccruate info
- breed resistance to change
- diver work efforts
- exclusion e.g migrants
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Organisational Design
The process of creating structures that best serve a company's mission and objectives
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1.Job Simplification Advantage
Production efficiency
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Job Simplification Disadvantage
No job satisfaction because of boring narrow jobs
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Job Rotation (attempts to)
- Cross- train and develop employees
- Combat freedom
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What does job enrichment and what does it significantly increase the potential for?
- The practice of building more opportunity for job satisfaction by expanding its content
- It increases potential for
- growth,
- achievement,
- responsibility and
- recognition
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Functional Structure- definition and advantages/disadvantages
- Positions grouped according to what they do
- Advantages:
- In depth expertise
- Clear career paths
- Economies of scale possible b/c of specialised people and environment
- Disadvantages
- Conflict between departments
- Managers trained too narrowly
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Divisional Structure- definition and advantages/disadvantages
- grouped according to product, service, customer type or geography
- Advantages:
- focus on client groups and react quickly
- performance more easily measured
- managers have broader base of training
- Disadvantages:Duplication of resources
- In depth expertise sacrificed
- Divisions compete rather than work together
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Matrix Structure- definition and advantages/disadvantages
- superimposes horizontal set of divisional reporting relationships into hierarchical functional structure.
- both functional and divisional
- employees report to 2 bosses e.g functional or project team leader
- Advantages:Decision making decentralised
- response to environment decreased
- functional specialist can be added or reassigned to projects as needed
- Disadvantages:Confusion over chain of command
- Increased admin costs
- increased politicisation
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Team structures
mobilising both permanent and temporary teams to accomplish special projects and day-to-day tasks
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Network structures
central core linked to networks of outside contactors and service suppliers
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Horizontal Differentiation
- degree to which the organisation is separated into different units on the basis of tasks performed by members
- Organisational silos have different
- goal emphasis
- Time emphasis
- Work Vocabulary
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Vertical Differentiation
refers to the number of layers of management in an organisation
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Vertical Differentiation-
The greater the number of layers the greater the complexity. Implications?
Potential for communication breakdown
More difficult to coordinate the decisions of managerial personnel
more liked that political and power plays will create admin bottlenecks
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Span of Control
refers to the number of subordinates a supervisor can effectively control.
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Spatial Dispersion
- degree to which location of an organisations offices, plants and personnel is dispersed
- The greater the dispersion the greater the complexity
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Integration- Formalsiation
degree to which jobs and procedures within the organisation is standardised
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High formalisation
- Minimum discretion over when and what is done
- clear job descriptions
- many rules to follow
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Low Formalisation
- Employee behaviour relatively non programmed
- Greater job discretion
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Formalisation Techniques
- Selection= people will fit in
- Role requirements= High or low formalisation
- Rules, Procedures and policies= specific standards and statements that govern or guide employees and often result in uniform behaviour or outputs
- Socialisation= adaptation process by which individuals learn the values, norms and expected behaviour patterns
- Product/ operations scheduling= coordinating
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Centralisation
- Degree to which decision making is made at a single point.
- Occurs when decision are made by top management
- Decentralisation is when decision making is widely dispersed
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What is organisational design?
- A tool used by people to coordinate their actions to obtain something the desire or value
- Process by which an organisations structure is determined
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Three types of design
- Bureaucratic
- Adaptive
- Virtual
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Bureaucratic Design (4points)
Based on logic, order and legitimate use of formal authority
- Clear cute division of labour
- Strict hierarchy or authority
- High level of formal rules and procedures
- Promotion base of competency
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Adaptive Designs
Adaptive Organisation
Organic Design
- Emphasis on flexibility, speed and performance
- Adaptive Organisation- operate with minimum bureaucratic features and with culture that encourage worker empowerment and participation
- Organic designs- relatively loose systems in which a lot of work gets done through informal structures and interpersonal contacts.
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Virtual Design
- Designed to create value in global economy
- Lack of physical structure- less tangible assets
- Use of Electronic communication technologies rather than buildings for workplace
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Contingencies of Organisation Design
Good design should result in supportive structure that satisfy situational demand that allow all resources to be used to best advantage. (5points)
- Environment
- Strategy
- Technology
- Size and life cycle
- Human Resources
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