REMINDERS

1
REMINDERS

• Lecture as usual on Friday, 21/9 at 10am
• No 11am lecture on Friday, 21/9
• Assignment due Monday 8 October
• NB University rules re plagiarism
• Penalties for late submission
• Revision lectures commence Wednesday 17
  October.
• Refer lecture schedule

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Basic Elements ofOrganisation Structure

• Engineering Management
• ELE 2EMT

George Alexander G.Alexander_at_latrobe.edu.au http/
/www.latrobe.edu.au/eemanage/
Lecture 8 19 September 2007
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Lecture outline

• Nature of organisation structure
• Types of departmentalisation
• Job design
• Vertical and horizontal coordination
• Restructuring

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The nature of organisation structure

• The formal pattern of interactions and
  coordination designed by management to link the
  tasks of individuals and groups in achieving
  organisational goals.

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Design Process

• The purpose and goals of the organisation must be
  very clear.
• The design process of organisation structure
  consists of four elements
• Assignment of tasks and responsibilities for the
  individual job positions,
• Grouping the individual positions into units and
  departments,
• Determining various mechanisms for the vertical
  co-ordination, and
• Determining various mechanisms for the horizontal
  co-ordination

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The nature of organisation structure

• The organisation chart
• Line diagram depicting broad outlines of an
  organisations structure
• The chain of command
• Unbroken line of command ultimately linking each
  individual with the top organisational position

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Chairperson, M.D., and C.E.O.
Secretarys Office
GM Marketing
General Counsel
GM Operations
GM H.R.
GM Finance
Communication
Insurance Operations
H.R. Develop
Internal Audit
Market Support
Actuarial
Health Unit
Investment
Field Mgmt Region 1
IMS
Training
Real Estate
Field Mgmt Region 2
Financial Analysis
Tax
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Departmentalisation

• Clustering individuals into units, and units
  into departments and larger units, to achieve
  organisational goals.

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Types of departmentalisation

• Functional structure
• Divisional structure
• Hybrid structure
• Matrix structure
• Emerging structures

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Functional structure

• A structure in which positions are grouped
  according to their main functional (or
  specialised) area.

CEO
Manager, Administration
Manager, Distribution
Manager, Manufacturing
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Functional structure

• Advantages
• In-depth expertise development
• Clear career path within function
• Efficient use of resources
• Possible economies of scale
• Ease of coordination within function
• Potential technical advantage over competitors

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Functional structure

• Disadvantages
• Slow response to multifunction problems
• Decision backlog at top of hierarchy
• Bottlenecks due to sequential tasks
• Inexact measures of performance
• Narrow training of future managers

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Divisional structure

• A structure in which positions are grouped
  according to similarity of products, services or
  markets.

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Divisional structure

• Advantages
• Fast response to environmental change
• Simplified coordination across functions
• Simultaneous emphasis on organisational goals
• Strong customer orientation
• Accurate measurement of performance
• Broad training in management skills

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Divisional structure

• Disadvantages
• Resource duplication in each division
• Reduction of in-depth expertise
• Competition amongst divisions
• Limited sharing of expertise between divisions
• Innovation restricted to each division
• Neglect of overall goals

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Matrix structure

• A structure superimposing a horizontal set of
  divisional reporting relationships onto a
  hierarchical functional structure.
• Appropriate when
• need a strong focus on both functional and
  divisional dimensions.
• need to quickly process information and
  coordinate activities.
• pressure for shared resources.

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Matrix structure
matrix bosses
two-boss employees
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Matrix Management/Projects

• All resources and skills are equally shared
  across the organisation
• Suits a project oriented organisation
• Can be very efficient way of utilising resources
• Provides variety of projects, and hence can be
  stimulating and satisfying for employees
• It may result in overloading of some members

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Project 3
Project 4
Project 1
Project 2
System Engineer
Project Engineer
Tech
Installer
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Division C
Division D
Division A
Division B
Quality Assurance
Human Resources
Finance
Product Management
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Matrix structure

• Advantages
• Decentralised decision-making
• Strong product coordination
• Improved environmental monitoring
• Flexible use of human resources
• Efficient use of support systems
• Fast response to change

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Matrix structure

• Disadvantages
• High administrative costs
• Confusion over authority and responsibility
  (potential)
• Excessive focus on internal relations
• Overemphasis on group decision-making
• Slow response to change (possible)

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Matrix organisation some practical experiences

• Enforces uniform policy application across
  divisions.
• Facilitates sharing of specialised resources.
• Brings together functional expertise and customer
  responsiveness.
• BUT
• Can result in responsibility conflicts and
  confusion in responsibilities and reporting.
  (Whos my boss?)
• Overall resource planning has to be effectively
  managed otherwise overloads and/or poor
  utilisation.

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Informal Organisations

• As well as formal structures, organisations do
  have informal structures not designed by
  management but emerging from common interest or
  friendship.
• Informal organisation elements also impact on how
  organisations behave.

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Job Design

• As different job types require different skills
  and activities it is necessary to determine the
  areas of work specialisation.
• Job design involves the specification of tasks
  associated with a particular job.
• Work specification includes a collection of jobs
  necessary for achieving organisational goals.
• A well done job design is important for the
  efficient performance of the organisation and
  motivation of its members.

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Job Design Trends

• Move from efficiency-driven highly defined,
  repetitive, (boring) jobs to -
• More varied approaches to job design featuring -
  
• Job rotation
• Multi-skilling
• Job enrichment
• Greater autonomy especially for groups of
  workers

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Methods of vertical coordination

• Linking of activities at the top of the
  organisation with those at the middle and lower
  levels to achieve organisational goals.
• Formalisation
• Span of management
• Centralisation vs. decentralisation
• Delegation
• Line and staff positions

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Formalisation - Policies Procedures

• Formalisation is the degree to which written
  policies, rules, procedures, job descriptions,
  and other documents specify what actions are (or
  are not) to be taken under a given set of
  circumstances.
• Most organisations need some degree of
  formalisation so that fundamental decisions do
  not have to be made more than once and so
  inequities will be less likely to occur.

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• Being too highly formalised can lead to
  cumbersome operations, slowness in reacting to
  change, and low levels of creativity and
  innovation.
• It becomes then a question of balance as to how
  much formality is necessary, and should apply.
• International quality standards ISO9001,9002
  (and common sense) demand that formal procedures
  etc. do reflect actual practice.

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Span of Management

• Span of management, or span of control, is the
  number of subordinates reporting directly to a
  specific manager.
• Managers should have neither too many nor too few
  subordinates.
• Then, what is a good balance of the span of
  management?

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Factors influencing span of management

• High competence levels
• Low interaction requirements
• Work similarity (between organisational peers)
• Low problem frequency and seriousness
• Physical proximity
• Few non-supervisory duties of managers
• Considerable available assistance
• High motivational work possibilities

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Delegation

• The assignment of part of a managers work to
  others, along with both responsibility and
  authority necessary to achieve expected results.
• Factors restraining delegation
• Fear of subordinate failure
• Time to train subordinates
• Enjoy doing tasks
• Release of authority
• Concern for task performance
• Fear subordinate competence

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• Centralisation
• The extent to which power and authority are
  retained at the top organisational levels.
• Decentralisation
• The extent to which power and authority are
  delegated to lower levels.
• Factors favouring decentralisation
• Large organisational size
• Geographic dispersion
• Technological complexity
• Environmental uncertainty

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Line and staff positions

• Line authority
• - The authority following the chain of command
  established by the formal hierarchy.
• Functional authority
• - The authority of staff over others in the
  organisation in matters related directly to their
  respective functions (e.g. HRM dept).

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Horizontal co-ordination

• Linking of activities across departments at
  similar levels
• Need for information processing across the
  organisation
• Promotes innovation through dissemination of
  ideas and information
• Risk of organisation silos

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Hierarchical Levels

• Organisational effectiveness is influenced by the
  number of its hierarchical levels.
• Problems with very tall organisations
• high administrative overhead,
• slow communication and decision making,
• more difficult to pinpoint responsibility for
  various tasks, and
• encouragement of formation of dull, routine jobs.
• each level must add value

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Restructuring

• Restructuring an organisation is the process of
  making a major change in the structure, often
  involving
• reducing management levels, and
• changing major organisational components through
  divestiture and/or acquisition.
• Centralising/decentralising activities

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Division C
Division D
Division A
Division B
Quality Assurance
Human Resources
Finance
Product Management
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Downsizing

• Downsizing is the process of
• significantly reducing the layers of middle
  management,
• expanding spans of control, and
• shrinking the size of the work force.
• Downsizing must be planned and implemented
  carefully.
• Done poorly, downsizing may result in loss of
  valuable employees, demoralised survivors, and an
  ultimate decline in productivity.

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• Done well, downsizing may result in reduced
  costs, faster decision making, more challenging
  jobs, fewer redundancies, and increased
  innovation.
• Voluntary redundancy, how does it work? and what
  is wrong with it?

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References

• Bartol, K.M., Martin, D.C., Tein, M.,
  Matthews, G., Management A Pacific Rim Focus,
  McGraw-Hill, 2002.
• and
• Bartol, K.M., Tein, M., Matthews, G., Ritson, P.,
  Scott-Ladd, B.,Management Foundations - A
  Pacific Rim Focus, McGraw-Hill, 2006.

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REMINDERS

• Lecture as usual on Friday, 21/9 at 10am
• No 11am lecture on Friday, 21/9
• Assignment due Monday 8 October
• NB University rules re plagiarism
• Penalties for late submission
• Revision lectures commence Wednesday 17
  October.
• Refer lecture schedule

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• Thanks for your attention