Week Two Organisation Design

1
Week Two - Organisation Design

• Structural configurations
• The formal hierarchy
• Multi-focused hierarchies
• Mechanistic and organic structures

2
Mintzberg' s organisational configurations

• Mintzberg argues that
• Structures exist to coordinate the activities of
  different individuals and work processes.
• The nature of the co-ordination changes with the
  increasing size of the organisation.

3
Mintzberg' s organisational configurations

• Mintzberg' s idea
• the building blocks and co-coordinating
  mechanisms required for any organisation are as
  follows
• Strategic apex
• Techno-structure
• Operating core
• Middle line
• Support staff

4
Mintzberg' s organisational configurations
5
Mintzberg' s organisational configurations

• The importance and relative size and mix of the
  building blocks will vary depending on the
  organisation
• Mintzberg discusses 6 organisational
  configurations all covering
• The environment
• Type of work
• Complexity of tasks facing the organisation

6
Mintzberg' s organisational configurations

• Simple Structure
• Machine bureaucracy
• Professional bureaucracy
• Divisional form
• The adhocracy
• Missionary organisations

7
A Mass Production Process
8
The formal hierarchy

• Basic structural forms include
• Small business structure
• Functional structure
• Product and geographical structure
• Divisional structure

9
Small business structure

• Also known as the entrepreneurial structure
• Key advantage is simplicity
• Owner/manager can adjust employee tasks to the
  latest opportunity
• Owner/manager responsible for strategic and
  operational management
• Self-contained
• Self-controlled business unit

10
Functional structure

• Functional usually the next stage in the business
  unit development
• Strategic objectives decided at board level
• Planning is divided between
• Corporate level
• Functional level

11
Functional structure
12
Product Geographical structure

• As the number of products or geographic regions
  grow functional design may not be appropriate
• Product orientation is used
• Main functions are apportioned to relative
  products
• With each product group specialised personnel
  will be attached.

13
Advantages of product divisionalisation

• Focus on product performance profitability
• Encourages growth and diversity
• The role of general manager encouraged.
• Product is generally preferred over geographic
  due to complexity.

14
Possible Road Transport Enterprise
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Divisional Structure

• When a functionally structured organisation grows
  by diversification
• Product structure is inappropriate
• Hence a divisional structure
• Strategic Business Unit (SBU)

16
Divisional Structure
17
Divisional Structure

• Difficulties here
• Corporate strategy becomes complex
• Increased divisional planning
• More operational planning at functional level

18
Holding (group) structure

• Radical form of divisionalisation
• Subsidiaries are legal entities
• Advantages
• A reduced central overhead
• Spreading of risk
• Easy to divest of subsidiaries.

19
Matrix Structure

• New complex structures
• Attention given to creation of
• Groupings
• Project teams
• Members of staff from different departments or
  sections assigned to the team for the duration of
  the project.

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Matrix Structure

• The matrix structure
• Where two or more significant criteria for
  success exist
• Management of each criteria are equally important
• Managers have equal weight
• The objective is to capitalise of the areas of
  expertise which can be stifled by the normal
  hierarchy.

21
Matrix Structure

• Adv
• Retains functional economies and product
  co-ordination
• Open communications and flexible goals
• Improved motivation
• People working in teams
• Specialists broadening outlook
• Encourages competition within the organisation

22
Matrix Structure

• Disadvantages
• Higher administrative costs
• Conflict between functional and product managers
• Threat to occupational activity
• Reporting to more than one superior
• Expectations not as clear i.e. everything is
  important, pay equal attention to everything!!

23
Organic and mechanistic structures

• Burns Stalker (1961)
• Distinguished between organic and mechanistic
  structures
• The beginning of administrative wisdom is the
  awareness that there is no one best way of
  designing a management system